As Mortgage Rates Hit 4%, Buyers Can Still Boost Their Chances
This article was first published on NerdWallet.com.
The 30-year mortgage rate has risen rapidly to its highest level since 2019, around 4%. The increase could compel home shoppers to look for houses in lower price ranges. Some might need to get preapproved again.
Mortgage rates have risen almost a full percentage point since late December. A few days before Christmas, the 30-year mortgage averaged around 3% APR in NerdWallet's daily rate survey. Tuesday, it averaged 4.03% APR.
Rising rates reduce one's buying power. Let's say you can afford $2,000 a month in principal and interest on a mortgage.
- If you started looking at homes before Christmas, when the 30-year mortgage was around 3%, you could have borrowed about $474,400 to get a $2,000 monthly payment.
- But with a mortgage rate of 4%, you could get a $418,900 loan with that same $2,000 a month in principal and interest. That's a reduction in affordability of about $55,500.
Rates went up so fast that the effects may feel shocking and disheartening. Here’s what would-be buyers can do to increase their chances of success.
Update the preapproval
Many buyers are encouraged to get...