Homebuyers’ quandary: to wait or not to wait for lower mortgage rates
Shop for a home now or hold out for possibly lower mortgage rates
LOS ANGELES — Shop for a home now or hold out for the possibility of lower mortgage rates? That question is confronting many home shoppers this spring homebuying season.
Lower rates give home shoppers more financial breathing room, so holding out for a more attractive rate can make a big difference, especially for first-time homebuyers who often struggle to find an affordable home.
However, there’s a potential downside to waiting. Lower rates can attract more prospective homebuyers, heating up the market and driving up prices.
Acting now would likely saddle a buyer with a rate of around 6.9% on a 30-year mortgage. In late October, the rate surged to a 23-year high of nearly 8%, according to mortgage buyer Freddie Mac. Economists generally expect the average rate on a 30-year mortgage to decline later in the year.
“If mortgage rates do in fact drop as expected, I would expect there to be more competition from increased demand, so that’s one reason to potentially act now,” said Danielle Hale, chief economist at Realtor.com. “And then those buyers, if mortgage rates do fall, would presumably have an opportunity to refinance.”
Gagan Hegde, a software engineer in Durham, North Carolina, is leaning toward the proactive approach as he looks to buy his first home.
Hegde, 29, worries that delaying his search would eventually put him up against others also looking for lower rates in a market that’s already plenty competitive.
Just recently, he matched the $450,000 list price on a townhome, but another buyer offered more than what the seller was asking.
Rather than dwell too much on mortgage rates, he’s now focusing on finding a three-bedroom, three-bath home he
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