To most buyers, mortgage rates could be the $64,000 question. Every quarter point increase in mortgage rates results in tens of thousands of dollars in payments over the long term (depending upon the amount borrowed). Month to month, it could be a higher payment of $100-$500 dollars. Obviously, this will impact the amount of home a buyer can afford or whether one can qualify for the loan in the first place.

According to the National Association of Realtors®:

Mortgage rates are at their highest levels in more than four years. The 30-year fixed-rate mortgage averaged 4.46 percent last week, according to Freddie Mac, and that’s largely expected to increase since the Federal Reserve said it is likely to raise its short-term interest rates this year. That could prompt mortgage rates to move higher at least three times this year, starting this month.

There is near-universal agreement that the new tax law will result in much higher federal deficits, as much as $1.5 trillion dollars over the next 10 years. Bigger deficits means higher interest rates, no question about that. Interest rates for this year have already approached the predicted rates for the entire year!

Most major housing agencies and groups predicted higher rates for 2018. But no one saw rates approaching these levels in the first 120 days of the year.

Following are rate predictions cast as 2017 came to a close:

  • Mortgage Bankers Association: 4.6%
  • Fannie Mae / Freddie Mac: 4.5%
  • Realtor.com: 4.6% average, reaching 5% by year-end
  • National Association of Realtors: 4.5%
  • Kiplinger: 4.4%
  • National Association of Home Builders: 4.34%

So what does this mean for you?

Certainly waiting longer will mean higher expenses over the long-term. Rate increases—even minor ones—can add up over time. Realtor.com® offers this example: On a $300,000 house with a 30-year fixed-rate mortgage and 20 percent down payment, the difference between a 4 percent and 5 percent mortgage rate is $142 a month. Calculated over the life of the loan, that is more than an extra $51,000! You can buy a lot more house for that amount of money.

So what are you waiting for? Contact a trusted lender,

And start searching for your dream home!

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