What Rising Interest Rates Mean for You
Inflation affects everyone, and first-time homeowners are feeling the effects of rising costs and interest rates — especially when it comes to financing a home. Here’s why the interest rate is rising and what it means for new homebuyers like you.
Why Are Interest Rates Rising?
The Federal Reserve, or “Fed” as they are known, indirectly determines interest rates by managing the nation’s money supply. This “tinkering” is their main tool in fighting inflation. When inflation rates are high, the Fed typically decides to increase interest rates, which, as the theory goes, will slow down spending and bring the economy back to normal. The opposite happens when inflation is low — interest rates are lowered to increase spending. The interest rate has increased four times in 2022, and it’s predicted that it may happen again at the Fed’s next meeting. While rising interest helps fight inflation, it certainly doesn’t help mortgage rates.
How Do Rising Interest Rates Affect My Mortgage?
Your mortgage may not be directly tied to the national key interest rate, but it’s certainly influenced by it. Mortgage rates have been rising, with monthly payments skyrocketing over the Spring and Summer of 2022. Since rates are increasing, home ownership is decreasing. Many people can’t afford such a drastic change in their mortgage rate; therefore, mortgage applications have decreased in the past year.
What Can I Do?
The best plan for first-time homeowners looking to secure a steady mortgage is to meet with a mortgage provider and determine the most suitable loan program for your situation as quickly as possible. You may find that the higher interest rate is not as prohibitive as you thought, especially when comparing a mortgage payment to the skyrocketing rents that are also plaguing most of the country. There are still numerous benefits to buying a home now and you can always refinance the high rate into a lower one when the economy improves. Plus, you will be locking in a payment as well as the value of a home since home prices, while levelling off in recent months, are surely to keep rising each year.
Secure the Best Rate with Butler Mortgage
Whether you’re a first-time buyer looking for a solid mortgage rate or a homeowner wanting to refinance, consider financing your home through Butler Mortgage. For more than 25 years, we’ve worked with all types of buyers looking to own a home in the Central Florida area. Let us help you find the right loan solution for you by calling 407-931-3800 or by filling out our free consultation form online.