A year ago, with rates around 4% and with a limited supply of homes on the market, buyers often found themselves in bidding wars, paying more than they had intended for their new home. But the national housing market has been slowing for the past 4 months. Homes are taking longer to sell, and average mortgage rates have risen about 1% above where they were a year ago – and are currently approaching 5%. And higher rates have taken some buyers out of the market.
After the incredibly low mortgage interest rates we’ve seen over the last 7 years, 5% at first glance seems high. But historically – even 5% is a low interest rate. When I bought my first home, my rate was 10.5%. I remember at that time hearing about parents of a friend who had a 5% rate back in the 1950’s and I was amazed, and jealous. Perspective can be helpful.