Mortgage rates haven’t just shot up this year, their swings have also been volatile.
Real estate firm Redfin notes the volatility in rate swings in the past three months has been the most dramatic since 1987. Rates lenders are saying it can change significantly even daily.
“Rates have fluctuated as much as a half a point just from day to day. So these are times that are really tricky for a homebuyer to even understand what they can afford and what plugs into their monthly budget,” said Redfin deputy chief economist Taylor Marr.
Buyers who began their search in the summer may have easily seen the monthly payment on their mortgage swing by hundreds of dollars a month by the time they made an offer in early fall.
Traditionally, buyers work with the mortgage they qualify for with a clear idea of what that will cost a month.
“It’s not always about just setting your budget [on] how much of a home you can afford,” he said. “But really it’s almost more about setting the monthly payment as to what you qualify for and then sort of dynamically adjusting what the price you are willing to pay is.”
Marr said volatility has changed the focus for buyers.
“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.
Mortgage company Bay Equity expects volatility in rates to continue in the near term, but mortgage rates should fall in the next 12 to 18 months if inflation eases as expected.
“The good news for people who can still afford to buy a home, and are set on making a purchase now, is that they should be able to refinance to a lower rate in a year or two,” said Justin Dimler, a sales manager with Bay Equity.
Refinancing isn’t free, however. The process requires being approved for a loan again, and comes with some significant fees.
