Planning a Purchase in 2022? Make Sure You’re Keeping an Eye on Interest Rates
Feb 09, 2022 brooklyn real estate agents,brooklyn realty,brooklyn rentals,Brooklyn Renters,interest rates,locking in an interest rate,mortgage loans,mortgage rate increase,rent vs buy
If you’re planning on buying a home in the near future, there’s one key area you’ll need to keep an eye on — interest rates. Below, we’ll dive into what these numbers have looked like over the past year, what they’re projected to look like going forward, and what this all means for your future home purchase.
COVID-19 and Mortgage Interest Rates
Interest rates on mortgages were lowered significantly due to COVID at the very beginning of the pandemic as a way to provide relief to individuals and the economy. This made it easier to buy homes, since the price difference between buying & renting in NYC has never been closer.
Unfortunately, though, the low rates can’t stick around forever, even if they are still historically low.
Interest Rate Hikes in 2022
Federal interest rates are predicted to jump three times in 2022, correlating with a 39-year high inflation rate. In order to re-stabilize the economy, interest rates are expected to rise, well-above the record low rates we saw throughout 2020 and into 2021 (we’re talking 2.96% – the lowest ever). But it’s nothing to really fear.
For example, interest rates were at 8.05% in 2000 and slashed down to 6.97% in 2001 – and interest rates have yet to even come close to that high 8% figure we saw 22 years ago.
So, even though interest rates are technically rising, they are still historically low, and won’t reach even the 4.69% we saw in 2010. But why ever let a good deal go to waste, if you can help it?
Why Interest Rates Affect Your Home Buying Purchase
Interest rates don’t only affect the amount of money you pay over principal throughout the course of your loan, they also affect the number you pay every single month. If interest rates rise, it will affect the dollar amount you’re approved for, too. And if you’re planning on purchasing a home that falls near the high end of your budget, this may mean you can afford less home than you could before.
To break it down simply, interest rates affect:
- The amount of money you’ll spend on your home long-term.
- The dollar amount you spend each month.
- The number you’re pre-approved for at the beginning of your search (which will affect offers you make & sometimes, apartments you’re allowed to visit).
Bottom line is, if you’re considering staying in Brooklyn for the next three-to-five years, now’s your chance to buy. You’ll build equity & capitalize on the still record-low interest rates that are hanging around.
What If I Don’t Want To Buy Right Now?
If now is not the right time for you, don’t worry! You can save for a bigger down payment so you can borrow less, and even start visiting properties to get an idea of what you want. Either way, speak to a mortgage professional as soon as you can because they can help you set clear goals to get you the kind of mortgage – for the kind of home – that you want.
Get in touch with us today so we can start the conversation! It’s never too soon to start thinking about it. From there, we can refer you to a great mortgage professional who will work with you to help make your homeownership dreams a reality.