The Feds raised the interest rates again today, July 26, by a quarter of a percentage point, the highest in 22 years. (source)

While mortgage rates are influenced by interest rate moves by the Feds, a number of other factors influence mortgage rates, including financial markets, inflation, Treasury yields and a homebuyer’s application-think credit score (source)

Still, the targeted interest rate range of 5.25%-5.50% could have a significant impact on home buyers who may experience higher prices on their loans. 

Feds Show a History of Raising Interest Rates

This is not the first time the Feds have raised interest rates which have now doubled since March of 2022 (source). Looking to the future, the Feds have hinted this may not be the last time they raise rates.

“The Fed left the door open to further rate hikes this year, with Chair Jerome Powell telling reporters in a news conference that additional tightening is possible unless inflation continues to cool rapidly” (source).

Advice to Home Buyers During Interest Rate Hikes

As Realtors and owners of real estate, it’s The Gamache Team’s responsibility to advise our clients on the best course of action to take when the Feds hike interest rates .

Every home buyer is different, and depending on your situation, there will be different solutions. 

However, here is our advice to home buyers during interest rate hikes:

• Meet with a Realtor to discuss your goals, concerns, and financial status. 
• Stay put. If the rates are out of your comfort zone, you may want to ride out the rise in rates with the understanding that what comes up, must come down! (or so we hope!) Use this time to work on your credit report and pay down debt so your debt-to-income ratio is more attractive and offers a better interest rate. 
• Place a larger down payment on the home. Putting more money down will decrease the loan amount and the price you pay for your mortgage.
• Buy now and plan to refinance when rates go down. If you find the home of your dreams, it may not be there if you wait for rates to go down. By waiting, you will also be competing with other buyers who waited and may lose out to someone else. As well, by waiting a year to buy the home, the home price may have risen, and you are paying more for the home.
• Shop around for the best rate. Lenders offer different rates, terms, and assistance. Shop around for what works for you.
• Buy down the rate. Ask your lender if this is a possibility. 
• Stay positive and informed. The worst decisions are sometimes made in haste or when pressured and frantic. 

Contact The Gamache Team for More Information

The Gamache Team has ridden the wave of the real estate industry for decades. We haven’t seen a market yet that our clients haven’t made it through. Whether you are looking to move to a home in Dublin, Pleasanton, Livermore, or anywhere in between, we can help.

Let’s start with an initial consultation of ways we can support you during the rise in interest rates and put together a plan of action. 

Contact us to start the home buyer’s journey today.