Mortgage rates hit 20-year high
AUGUSTA, Ga. (WFXG) - Mortgage rates are the highest they've been in two decades, around 7%, more than four times the low rate in 2021.
During the COVID pandemic, so few people were buying homes that low demand led to the lowest interest rates in decades.
Dr. Simon Medcalfe, an economics professor at Augusta University says the rates are affected by changes the Federal Reserve has made to combat inflation. The Reserve has increased interest rates several times this year, as recently as September.
“The Federal Reserve is raising interest rates, specifically the federal funds rate, which isn’t the mortgage rate, but it has knock-on effects all through the credit markets,” explains Medcalfe.
On its surface, this increase may appear to inflate the cost of your dream home. Local Realtor Joshua Keck says there is more to home pricing than that. Regarding lower demand, Keck says it has affected the housing market, but it may not be a bad thing for buyers.
"We're getting more balanced," he says, "so buyers now have more leverage in the purchase process. They’re not having to fight off 15 other multiple offers.”
When mortgage rates were very low, those multiple offers due to high demand may have driven purchase prices up. Now that interest is up, people can expect to see a lower demand, which is exactly why the Federal Reserve is increasing interest rates--to slow demand and, ultimately, inflation.
Keck says buying a home is a sound financial decision, even now.
“The American real estate market always over time goes up. It’s going to have ups and downs, but the progression of it has always moved up and will continue to move up.”
According to a new date on Realtor.com, Augusta ranks as one of the ten cheapest cities in America to purchase a homeRealtor.com, Augusta ranks as one of the ten cheapest cities in America to purchase home right now.
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