By Natalie Mojica
While fixed mortgage rates have been steadily rising the past few weeks, it appears they are finally stabilizing. Today, the average mortgage rate for 30-year fixed mortgages is 3.42%.
Mortgage experts like Mike Fratantoni, the chief economist at the Mortgage Bankers Association, think the average rate on a 30-year mortgage will increase throughout the year. Frantantoni predicted it would hit 4% by late 2022.
This prediction follows the latest announcement from the Federal Reserve that it will raise interest rates in March to curb inflation.
“We definitely are poised for a March increase. But after that, I want to see what the data brings us […]let’s get through Omicron, let’s look at this and let’s see,” said Mary Daly, a Fed president from San Francisco.
Besides the mortgage rate, analysts from Redfin, a real estate brokerage, reported an increase in affordable housing on the market. For instance, in Washington D.C., affordable listings with a median sales price of $150,000 increased 41% in 2021 compared to 2020.
In addition to the positive mortgage news, the Washington Post reported that owning a home is now more affordable than renting in 58% of housing markets in the U.S. The only places where renting is a better financial option are most urban areas like Miami or New York City. However, buying remaihouns more affordable in cities like Houston and Philadelphia.
Despite the increase in affordable houses and low fixed mortgage rates, many consumers are still frustrated with the current U.S. housing market. From the end of 2020 to the end of 2021, average home prices have increased by 17.5%.
According to The Atlantic, the increase in prices has less to do with the pandemic than people think. The primary cause is the relationship between the housing market’s supply and demand with future buyers. Currently, there is a disproportionately high market of new buyers with a smaller supply of homes.
“If you’re buying a house, it should be because you want to live in it for at least five years, and ideally many more—which also will mean that even if prices fluctuate, you have a better chance of your investment appreciating over time. The longer you stay in the house, the [less] your timing in this particular house-price cycle [will] matter,” Chris Herbert, the managing director of Harvard’s Joint Center for Housing Studies, advised consumers looking to buy a home soon.