If you’ve been thinking of buying a home, you may have been watching what’s happened with mortgage rates over the past six to 12 months. It’s true they’ve risen dramatically and have more than doubled here in Las Vegas, but where will they go from here, especially as the market continues to slow?
I have been a Realtor here in Las Vegas since 2008 and spent four years before that as a loan officer also in Las Vegas. I remember from 2004 to 2008 rates were in the 5 percent to 6.5 percent range and those rates were “historic lows” at the time. There were also other loan programs, such as “negative amortization and interest-only” loans. But those creative financing type mortgages, according to some experts were the reason for the Great Recession. So that may be a discussion for us to have in the future.
But for the last decade mortgage rates also have been at truly “historic lows” averaging in the 3 percent range for that period of time. Many recent homebuyers have gotten a mortgage rate in the 2 percent range in recent years. My firm and I have personally helped thousands of clients attain these low rates. So, buyers, sellers and real estate/mortgage industry professionals have been spoiled by these rates.
So, for example, your typical 35-year-old, first-time homebuyer isn’t excited about a 6 percent mortgage rate when all they have heard in the recent past is that rates are the lowest ever.
While mortgage rates continue to fluctuate due to ongoing inflationary pressures and economic uncertainty, experts project they’ll start to stabilize in the months ahead. According to the latest projections, mortgage rates are expected to hover in the low-to-mid 5 percent range, initially, and then potentially dip into the high 4 percent range by later next year. Also, look for the adjustable-rate mortgage (ARM’s) to start making a comeback. These mortgages for many years were a great option for a buyer to obtain a rate lower than the 30-year fixed rate and have a lower payment for a three-, five- or seven-year time frame then refinance into a 30-year fixed rate. These loan programs could bring you some welcome relief.
So far this year, mortgage rates have climbed over 2 percentage points because of the Federal Reserve’s response to inflation, and that’s made it more expensive to buy a home. And wondering if the rise in rates will continue is keeping some prospective buyers on the sidelines.
But now that experts say mortgage rates should stabilize, this gives you a bit more certainty about what they think the future holds, and that may help you feel more confident about your decision to buy a home.
Whether you’re looking to buy your first home, move up to a larger home or even downsize, you need to know what’s happening in the housing market so you can make the most informed decision possible. Keep in mind just as mortgage rates have increased, rent also has risen considerably in the last decade. The rent for a typical 1,500-square-foot, three-bedroom, two-bath home in Las Vegas has almost doubled in recent years.
As you think about your homeownership goals and decide if now’s the time to make your move, the best place to turn to for that information is a full- time Realtor and loan officer. Let them help guide you in this process.
Remember, this will be most likely the largest purchase in your lifetime.
Tim Kelly Kiernan is the branch manager for Realty ONE Group Summerlin.
