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Mortgage rates trended down quite a bit this week, providing some wiggle room for buyers who have been struggling with affordability.

After increasing by more than three percentage points this year, rates may have finally peaked, which is good news for homebuyers hoping to enter the market in 2023. Lower rates increase home shopper buying power, meaning they can get approved for larger mortgages.

But decreasing mortgage rates are a double-edged sword, since low rates typically create more competition among buyers, pushing home prices up.

“Even as days on the market are lengthening, overall housing inventory still remains near historic lows,” Lawrence Yun, chief economist of the National Association of Realtors, said in a recent blog post reacting to the latest housing starts data, which showed that housing starts fell in October. “New listings are actually lower compared to the same period a year ago. That means once the gate opens a bit for homebuyers, we could again face a housing shortage.”

Today’s mortgage rates
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Use our free mortgage calculator to see how today’s interest rates will affect your monthly payments:

By clicking on “More details,” you’ll also see how much you’ll pay over the entire length of your mortgage, including how much goes toward the principal vs. interest.

Are HELOCs a good idea right now?

Many homeowners gained a lot of equity over that past couple of years as home prices increased at an unprecedented rate. But because rates are so high now, tapping into that equity can be expensive. 

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For homeowners looking to leverage their home’s value to cover a big purchase — such as a home renovation — a home equity line of credit (HELOC) may still be a good option. 

A HELOC is a line of credit that lets you borrow against the equity in your home. It works similarly to a credit card in that you borrow what you need rather than getting the full amount you’re borrowing in a lump sum. 

Depending on your finances and the type of HELOC you get, you may be able to get a better rate with a HELOC than you would with a home equity loan or a cash-out refinance. Just keep in mind that HELOC rates are variable, so if rates start to trend up further, yours will likely increase, as well.

Mortgage rate projection for 2023

Mortgage rates started ticking up from historic lows in the second half of 2021 and have increased over three percentage points so far in 2022. They’ll likely remain near their current levels for the remainder of 2022.

But many forecasts expect rates to begin to fall next year. In their latest forecast, Fannie …read more

Source:: Business Insider

      

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