Rising Interest Rates? Sure, But That Doesn’t Mean This Isn’t a Great Time to Buy a Chicago Home
It’s important to note that mortgage interest rates remain near historic lows. But, yes, they are also on the rise.
The Freddie Mac Primary Mortgage Market survey reported that on Feb. 22 the average interest rate on a 30-year, fixed-rate mortgage stood at 4.4 percent. That’s up 0.02 percent from a week earlier and 0.24 percent from a year ago.
Rates are rising, too, on 15-year, fixed-rate loans. Freddie Mac reported that the average interest rate on such a loan was 3.85 percent as of Feb. 22, up 0.48 percent from a year earlier.
Now, rising rates don’t mean that this isn’t a good time to buy a condominium or single-family home in Chicago. Rates are still at incredibly low levels. Remember, there was a time when buyers considered rates of 6 percent on 30-year, fixed-rate loans to be great ones.
Javier Vivas, director of economic research for Realtor.com said that rising rates shouldn’t slow the home-buying market. That’s good news for sellers who need plenty of buyers to increase the odds that they’ll move their residences for good profits.
“Demand for homes is likely to remain as persistent as ever this spring,” Vivas said in a written statement. “While rising rates provoke buyer anxiety and decrease affordability, the desire to purchase a home is driven by income and family changes, and will likely remain untouched by rising mortgage rates.”
If you’re ready to buy, there are some steps you can take to boost the chance that you’ll earn a lower interest rate from mortgage lenders. First, pay all your bills on time and pay down as much of your credit card debt as you can. These two steps will help your three-digit FICO credit score. Lenders give the lowest interest rates to borrowers with the best FICO scores.
Next, save up money for a larger down payment. The bigger the down payment you can provide when buying a home, the more likely it is that lenders will give you a lower interest rate. That’s because you’re less likely to stop making payments if you’ve already invested a significant amount of money in your home.