My short answer is “No”. Last year saw mortgage interest rates hit historic lows, but this week we are seeing a small increase with the average for a 30-year fixed mortgage at 3.14%. Obviously, higher rates mean you pay more for a home both monthly and in the long term, and in a balanced market this might begin to slow demand. However, inventory is so low it is doubtful rising rates will have a major slowing effect.
As the year progresses interest rates are expected to continue to rise as noted in the graphic above.* The bottom line is that by the end of the year it will cost more to buy a home so buyers should act sooner rather than later. For example, with a 30-year mortgage of $975,000 at 3.14% the monthly payment would be $4,185. At 3.7% it goes up to $4,488 – a little over $300 a month difference, but over the life of the loan that is $109,000. For sellers, it is likely prices will continue to rise but if more buyers seek to get in the market now to take advantage of lower rates, demand may soon be at its highest point which makes this a great time to sell.
All in all, buckle-up! I predict that the market will remain crazy competitive throughout 2022 and home prices will continue to rise no matter what happens to interest rates.
* These are the projections offered by Fannie Mae, Freddie Mac, the Mortgage Bankers Association and the National Association of Realtors.
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