Could 5% Mortgage Rates Be Good for First Time Home Buyers?

Could 5% Mortgage Rates Be Good for First
Time Home Buyers?
Earlier this month mortgages hit 5 percent interest rate. While this is significantly higher than this time
last year, there might be perks for taking out a 5 percent mortgage loan for first time home purchasers.
It’s Too Late for Great Rates
Unfortunately for many looking to purchase homes right now, the chance at a low mortgage rate is
gone. If there were ever a great time to purchase a home, it was in the last ten years. This is because
mortgage rates stayed under five percent from 2009 until just earlier this month, when they once again
rose.
Historical Rates Tell A Different Story
Despite being historically low over the last decade, mortgage interest rates tell us a different story if we
look at the average range between 1971 (when records first were kept) until now. That average rate is
8.16%, which is an incredible three percent higher than the five we are now seeing.
Of course, most homeowners won’t care what the rates were historically. Indeed, they only really care
about the current situation, in which rates are higher than recent years – and appear to still be on the
rise.
Why Now May Be the Right Time
The rates of the past have already come and gone. If you weren’t already in the market to purchase a
home, then there is no way you could have jumped on those rates. What matters as a buyer is where
the rates are now and where they will go in the future.
As of right now, we are looking at that 5 percent rating we keep talking about. The future appears to be
moving onwards and upwards, with industry professionals believing the rates may continuing on to 6
percent – or even 7 percent or higher – within the next few years.
This means that now is the best time in the foreseeable future to purchase a home if you plan on doing
so. It wouldn’t be the time to “wait it out” for lower interest rates, unless you plan to play the waiting
game for several years – or possibly a decade.
Why Rates Are Going Up
The big question for many potential homeowners is: Why are rates going up? The simple answer to that
question is that everything appears to be against both the real estate and mortgage industries at the
moment.
There is still an extensive lack of available housing, which is sending the price of resale homes
skyrocketing. People are living in their homes longer, which further restricts the resale market.
On the new home front, construction companies are running into issues every step of the way. Recent
laws have made it difficult to get approvals, and there is limited land available to build on. Materials are
getting harder to come by, and there is a shortage on workers to fulfill demand.

All these things combined means that less people are taking out loans, and thus, loans are making this
up by increasing interest rates.