What do higher mortgage rates mean to Boston condo buyers?
Mortgage rates continue to fluctuate by nearly half a percentage point every month, leaving Boston condo buyers facing the most volatile three-month period they’ve seen since 1987.
What does this mean for those looking to buy a Boston condo for sale right now? It’s going to be expensive.
Here’s an example. When potential Boston condo buyer started their search in early July, their expected monthly payment was $3,051 (with a 20% downpayment and a 5.7% mortgage interest rate. In early August, that monthly payment on the same home would have been $2,874 with a 20% downpayment and 4.99% mortgage rate. But if they actually purchased that home in late September, Redfin said the final monthly payment would be $3,202, with a 20% downpayment and the 6.29% mortgage rate.
But Redfin deputy chief economist Taylor Marr says the challenges homebuyers are facing in today’s market go beyond the “dwindling affordability caused by high mortgage rates and home prices.”
“The whiplash in mortgage rates between when homebuyers set their budget and when they make an offer is also making it extraordinarily difficult to plan ahead,” Marr said.
The reason behind the constantly changing mortgage rates is the Federal Reserve raising interest rates to help temper inflation. Last week, interest rates rose from 3% to 3.25%, and they are predicted to reach 4.4% by year’s end.
Justin Dimler of Redfin’s mortgage company Bay Equity said mortgage rate volatility will likely continue in the near term but we should see some relief in mortgage rates, as they are expected to fall in the next 12 to 18 months if inflation eases as expected.