Is It a Good Time to Buy a House?
Is It a Good Time to Buy a House?
If you're wondering whether it's a good time to buy a house, ask this instead: Is it a good time in my life to buy a house?
Housing market trends give important context. But whether this is a good time to buy a house also depends on your financial situation, life goals and readiness to become a homeowner.
Here's what to consider.
The market outlook for home buyers
These are some factors affecting buyers in today's market.
Mortgage rates slowly decline
The average interest rate on a 30-year fixed-rate mortgage was 6.42% annual percentage rate (APR) for the week ending Jan. 4, down nine basis points from the previous week and up 11 basis points from a year ago, according to rates provided to NerdWallet by Zillow. A basis point is one one-hundredth of 1%.
Average weekly mortgage rates
Mortgage type |
APR |
---|---|
30-year fixed mortgage |
6.42% |
15-year fixed mortgage |
5.61% |
5-year adjustable |
7.58% |
Averages are for the week ending Jan. 4, 2024, according to rates provided to NerdWallet by Zillow.
Buyers waiting for lower mortgage rates are finally starting to see some relief. The 30-year rate has been falling for the past 10 weeks. That’s welcome news after the 30-year rate hit a peak in October 2023, topping 8% for the first time since 2000. As the economy cools, as many experts predict, mortgage rates are likely to continue a modest decline into 2024.
Since March 2022, the Federal Reserve has raised a short-term interest rate 11 times — up a total of 5.25 percentage points — to control inflation. The short-term interest rate the Fed controls also influences mortgage rates. The Fed didn’t raise rates at its recent meeting, ending on Dec. 13. For home buyers, that’s better news than another increase, but it doesn’t provide the same relief as a rate cut might.
Higher rates shrink buying power because they make home loans more expensive. For example, the monthly payment for a $350,000 house with a 20% down payment would be $1,679 with a 6% mortgage rate on a 30-year mortgage, not including home insurance and property taxes. With a 7.5% rate, the monthly payment would be $1,958 — $279 higher.
You can't influence average rates, so focus on the things you can control:
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Shop around for the best deal. Especially given today's higher rates, buyers can save $600 to $1,200 per year by applying for loans from multiple mortgage lenders, according to a February 2023 study by Freddie Mac, the government-sponsored entity that buys conforming loans from mortgage lenders.
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Make sure you can afford the monthly mortgage payment. A home affordability calculator can help you crunch the numbers.
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After getting approved for a home loan, consider locking in the mortgage rate until the loan closes to protect against further rate increases.