30-year mortgage rates are on the rise again. So are other types of mortgages. What awaits real estate investors this month?

Home ownership is becoming more and more elusive and mortgage rates are getting higher and higher. 30-year mortgage rates may have dipped temporarily a few months ago, but are now back above the 6.00% mark.

Starting in Q2 2022, mortgage rates have been on a roller coaster ride. Even as the Federal Reserve doubles down on its fight against inflation, mortgage rates are taking a major hit, with 30-year mortgage rates already at 6.00% with a quarter to go until 2022. Virtually every market forecast for the year predicted that we would end the year with rates at 5.00%. None of them saw us surpassing that mark and reaching 6.00% territory during Q3 2022.

We expect the wild ride to continue over the next few weeks as the Fed maintains its anti-inflation stance. Experts fear that the Fed’s rate-hiking approach will eventually lead us into a recession, which in turn could cause mortgage rates to fall.

At the time of writing, rates on 30-year fixed, 15-year fixed, ARM, and jumbo mortgages have risen. Below are mortgage rates as of September 12, 2022. according to a Bankrate report:

Loan type Current rate The previous week A change
30 year fixed rate mortgage 6.08% 6.05% +0.03
15-year fixed-rate mortgage 5.40% 5.23% +0.17
5/1 adjustable rate mortgage 4.53% 4.46% +0.07
30-year fixed large rate 6.07% 6.05% +0.02
30-year fixed rate refinance 6.08% 6.03% +0.05

Greg McBride, chief financial analyst at Bankrate, says:

The cumulative effect of these sharp rate hikes cooled the housing market and caused the economy to begin to slow, but did little to reduce inflation.

On the topic: When will mortgage rates drop in 2022?

How the market has reacted over the past month

As we reported last week, Art rising mortgage rates, including 30-year mortgages, contributed greatly to people choosing to simply move into rental properties at this time. Because of high interest rates, the number of homeowners today is back to a 30-year low.

It also doesn’t help that property prices continue to rise, as they inevitably do. While most real estate markets are cooling, that doesn’t necessarily mean prices are falling as well. It simply means that the pace of house price growth has slowed compared to how it has been going since the beginning of the year.

Potential home buyers today have to deal with both housing affordability and inflation. On the one hand, as the economy returned to near-pandemic levels, inflation picked up due to other global economic and geopolitical factors. They have had a significant impact on consumer spending, especially where investment properties worried.

On the topic: How to find a profitable investment property for sale

Thanks to rising 30-year mortgage rates, home ownership has fallen to an all-time low.

What did investors do last month?

Real estate investors are divided by the current economic situation. For one thing, they recognize the potential of buying now, before affordable housing becomes unaffordable. They figure if they take the leap now, they can save themselves from getting hit with higher rates on 30-year or 15-year fixed-rate mortgages. They can also take advantage of a small plateau in house price growth.

On the other hand, not all investors have enough extra money to invest in income properties, given the rate of inflation and the jump in mortgage rates. Affordable housing is becoming more elusive as the days go by. With rising rates and mortgage rates, the novice investor isn’t as confident in the market, while the average investor is finding it increasingly difficult to figure out how to get back on track.

This is where a little due diligence can help.

Finding the right investment property with a real estate website like Mashvisor makes it easy to find the right rental property in the most profitable markets. Site real estate heat map and investment property calculator designed to help investors work real estate market analysis and find the property you want.

To learn more about how Mashvisor can help you find profitable investment properties, schedule a demo.

What this means for real estate investors

At this point, as mortgage rates continue to rise, what’s an investor to do?

Bankrate Senior Economic Analyst Mark Hamrick says:

All too often, some homeowners take the path of least resistance when looking for a mortgage, in part because the home buying process can be stressful, complicated and time-consuming.

He goes on to add that when we’re talking about money-saving potential, finding the best possible mortgage deal has a great return on investment.

Why leave that money on the table when all it takes is a little more effort to find the best rate or lowest cost mortgage?

With 30-year mortgage rates already above 6.00%, investors should take the time to buy options. Talk to bankers and lenders and ask them about their products. Consult other real estate investors for any advice. Ask real estate professionals for advice. This can give you some good leads that will eventually lead you to a good mortgage deal.

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Buy, sell or wait: what to do now?

You may be asking yourself if now is a good time to buy real estate. Or maybe you’re wondering if you should sell now. Or maybe you’re thinking of just waiting and seeing where the market goes in the next few weeks.

The answer will depend on your situation. Every investor has a different context and experience. There is no one-size-fits-all approach when it comes to investing in real estate. The most important thing in this industry is honesty. You must be honest and reasonable enough to answer difficult questions about your financial situation.

If you decide to buy a rental property at this time, can you really afford the down payment, closing costs, and all the other fees associated with the transaction? Can you afford home repairs and upgrades under state rental property laws? Do you have a solid marketing plan for your rental business? Where will you get the financing for this?

Here are some of the questions you need to answer before buying real estate.

On the other hand, you may already have an investment property and are seriously considering selling it at this time. Given the current market conditions, many sellers are lowering their asking prices just to sell as people put off their home buying plans due to high prices and interest rates. Are you motivated and desperate enough to sell your property at a loss?

In the end, it will all come down to your unique situation. Talk to a professional about it and carefully consider the next few steps.

Wrapping it up

As 30-year mortgage rates and rates on other types of mortgages rise, housing affordability is further out of reach for homebuyers and investors. If you are an investor and thinking about selling or buying at this time, think twice.

It would be helpful to use a website like Mashvisor to search for promising properties that will give you the best return on your investment.

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