Interest rates

How rising mortgage interest rates affect you as they hit the highest levels since the start of the pandemic

MORTGAGE rates are starting to rise again – and some may be wondering how they will be affected by the move.

For the week to Jan. 20, the 30-year fixed-rate mortgage climbed to an average of 3.56%, according to Freddie Mac.

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With rising mortgage rates, Americans can now expect to pay more interest

That’s not only higher than the previous week’s rate of 3.45% – but it’s the highest level since the start of the coronavirus pandemic.

The recent spike comes as markets brace for the Federal Reserve to act in 2022 on interest rates and cool demand.

“Due to rising mortgage rates, buying demand has eased slightly ahead of the spring home buying season,” said Sam Khater, chief economist at Freddie Mac.

“However, supply remains close to historically tight levels and house prices remain high, keeping the market competitive.”

The central bank is now planning up to four rate hikes in 2022 to tackle soaring inflation, which was 7% in December.

Although the Fed does not set mortgage rates, it impacts them with its monetary policies.

How rising mortgage rates affect you

Simply put, the higher rates go, the more expensive it becomes to borrow.

And this will particularly affect first-time buyers looking to buy from home.

For example, if you were to act today at 3.56%, you would pay approximately $188,592 in total. interest on a loan of $300,000 over 30 years, according to calculator.net.

If you had done the same when interest rates were 2.72% earlier in the pandemic, you would have only paid about $139,186 – $49,406 less in total.

When looking for a mortgage, be sure to compare interest rates and the APR, which is the total cost of the mortgage.

Some lenders may advertise low interest rates, but then charge you high fees, which are reflected in the APR.

Meanwhile, homeowners looking to refinance will find it more expensive when rates rise.

If you’re not already locked into a fixed deal, it might be worth doing before rates go up even more.

Just be aware that if you lock in a mortgage rate, you won’t benefit if rates drop later until the end of your deal.

And also, although the Fed is planning several rate hikes, this does not mean that house prices will fall in 2022.

Maggie Overholt, editor of The Mortgage Reports, recently told The Sun that prices won’t fall unless a real estate crash occurs.

It’s unlikely because the owners have “lots of equity” and there is “solid employment”.

“Prices are not going to drop suddenly. But neither are they expected to continue to grow 18% year over year,” she said.

“Hopefully we will see a more normal home price appreciation trend in 2022; somewhere in the 4-5% range, which has been the norm for the past few decades. »

We break down the states where home prices have risen the most.

We also reveal which states are handing out the biggest stimulus checks to homeowners in need.

Meanwhile, housing assistance has ended in four states.

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