Factors Other than Rising Mortgage Rates to Consider When Buying a Home

Katarzyna Bialasiewicz /

If you’ve been paying attention to mortgage rates, you know they’re much higher now than they were a year ago. The average 30-year fixed-rate mortgage in the US stood at 6.15% as of January 19, 2023, according to Freddie Mac. That’s up from 3.56% a year earlier.

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What you may not know is that even though the rates have almost doubled in a year, they are still low compared to the past. In fact, mortgage rates only seem high now because they are coming off record lows. For most of the 2010s, average rates in a 30-year FRM hovered around 5% or less, an outlier compared to previous decades.

Mortgage rates during the 2000s mostly hovered above 6%, according to the St. Louis Federal Reserve. During the 1990s, the average rates used to be 7% or higher. The lowest average rate during the 1980s was 9.06% in February 1987, while the highest average rate for that decade was a mind-boggling 18.27% in September 1981. For most of late Through the 1970s, average mortgage rates hovered above 9%.

Given those numbers, suddenly a 6.15% mortgage rate doesn’t seem so expensive. While mortgage rates are certainly an important factor when buying a new home, they are far from the only consideration. Here’s a look at four other factors when you’re buying a home now:

house prices

For homebuyers, a positive trend in 2023 is that prices are expected to continue to fall from the all-time highs they reached in the previous two years. Fannie Mae expects median home prices to fall 1.5% nationwide this year, according to an Experian report. But others expect a much steeper decline, including analysts at Goldman Sachs, who project that home prices could fall 5-10% next year.

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Seeing how much home prices could fall nationally won’t help you much if you’re moving into a market where prices continue to rise. For example, several cities in Florida continued to see home prices soar in 2022 despite a slowdown in the broader US market. If you plan to buy a home in a market where demand continues to outstrip supply, expect to pay top dollar.

credit score

Even though mortgage rates are coming down, you won’t be able to take advantage of the lower rates if you don’t have a good credit score. A good credit score range is typically around 670 to 739, CBS News reported. If you’re in this range or higher, you have a better chance of getting approved for a mortgage with the best interest rates, something that can help you save tens of thousands of dollars over the life of the mortgage.

When to make an offer

Although the housing market is cooling off in much of the United States, that doesn’t mean you won’t face competition for the right home at the right price. If you find a home that meets all your requirements, make an offer immediately. Buyers who wait to see if the seller will lower the price could be making a costly mistake.

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“All they’re doing is increasing the likelihood that another buyer will find the same home and make an offer,” Gary Reggish, regional vice president for the National Association of Realtors, told CBS News.

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