The feds raised the overnight lending rate by a 0.5% a few weeks ago — the largest jump since May 2020. Buyers are panicked about what rising rates mean for them and real estate agents are concerned about the market and what to tell their clients.

Is now still a good time to buy?

Yes! Despite the increase and rising home prices, rates are still low by historical standards and buyers shouldn’t be scared off if they find a home they like and can afford. And let’s not forget, rents are rising too, sometimes at levels far outpacing increases in interest rates or home prices.

Here are some things to consider in today’s market of increasing rates:

Pre-approvals: Ensure your buyer’s pre-approvals are up-to-date and use the property’s current tax information when submitting an offer. Rates and affordability can change over a 30-day period so keep in touch with a Key Mortgage loan officer. You need to make sure the property is still affordable for your client and you don’t want your offer to get overlooked with an outdated interest rate or incorrect taxes in a multiple offer situation.

Adjustable-Rate Mortgage: An ARM is fixed for several years (5-10 years) and the rate is lower than a 30-year fixed. Since many buyers do not believe they will be in the home that long, this is a great way to save thousands of dollars over the time they will be there. And if they decide to stay – your client can refinance at any time with no penalty.

Points: In some instances, buyers can consider looking at buying discount points — paying a fee upfront in exchange for a lower interest rate. This is only for buyers looking to keep the loan (not moving or refinancing) before the breakeven point.

Need financial guidance in finding the right loan option for your clients? Call one of our Key Mortgage loan officers. They will work with you and your client from the beginning to ensure they find the house and loan that works for them.