Is it better to sell a house when interest rates are high?
Rising mortgage interest rates often mean a smaller pool of buyers who can afford the price you want. Selling a home isn't free, so if you can't maximize your price, you might want to wait. If you recently refinanced your mortgage, it may not make financial sense to sell just yet.
Yes, you should buy a house now if you're financially ready to do so. Here are the biggest reasons why that's the best move: If interest rates continue to drop, then house prices will start going up. Lots of folks haven't been able to afford a house because of high interest rates, so they've been sitting and waiting.
And Fannie Mae predicts that these rates may go even higher in 2024. Given the circ*mstances, some sellers believe mortgage rates won't decrease any time soon. Others worry that if they wait too long, the prices might go down. So, list your house for sale now to sell it faster and get the best price.
As mortgage rates rise, the effect on real estate investing can be positive. The market for rental properties will increase because fewer people can qualify for mortgages. That said, rising interest rates reduce prices, so it can sometimes be better to buy during a rising interest rate environment.
It's possible that rates will one day go back down to 3%, though if current trends hold that's not likely to happen anytime soon.
Lower interest rates tend to create a more dynamic and competitive market for buyers and often result in an eventual rise in home prices. Sellers: Rising interest rates result in a decreased demand for homes and sellers may be facing a smaller pool of potential buyers.
In its March Mortgage Finance Forecast, the Mortgage Bankers Association predicts that mortgage rates will fall from 6.8% in the first quarter of 2024 to 6.1% by the fourth quarter. The industry group expects rates will fall below the 6% threshold in the first quarter of 2025.
Mortgage interest rates are expected to ease in 2024, easing the financial pressure on buyers and, in turn, sellers. The influential Mortgage Bankers Association is forecasting that mortgage rates will hit 6.1% by the end of 2024. This creates a more favorable climate for real estate transactions.
Here's how each month of the year ranked for the best time to sell a house. The highest-earning months are, in ranking order, May, June, April and March. Just over 18 million purchase transactions took place during this period, according to ATTOM.
The answer really depends on your personal circ*mstances. “If you're concerned a recession is coming, it's generally better to sell now instead of waiting,” says Jade Lee-Duffy, a San Diego–based broker. However, “selling during a recession might be beneficial if you're looking to downsize or rent.
What is the current interest rate?
| Product | Interest Rate | APR |
|---|---|---|
| 30-Year Fixed Rate | 6.99% | 7.04% |
| 20-Year Fixed Rate | 6.74% | 6.79% |
| 15-Year Fixed Rate | 6.42% | 6.50% |
| 10-Year Fixed Rate | 6.28% | 6.36% |
Projected Interest Rates in the Next Five Years
ING's interest rate predictions indicate 2024 rates starting at 4%, with subsequent cuts to 3.75% in the second quarter. Then, 3.5% in the third, and 3.25% in the final quarter of 2024. In 2025, ING predicts a further decline to 3%.
In general, interest rates are likely to rise if the housing market crashes. This is because when the housing market goes down, it's often a sign that the overall economy is doing poorly too. And when the economy does poorly, investors typically look for safer investments like government bonds and mortgages.
Legally speaking, there's no limit to how many times you can refinance your mortgage, so you can refinance as often as it makes financial sense for you. Depending on your lender and the type of loan, though, you might encounter a waiting period — also called a seasoning requirement.
In today's market, a good mortgage interest rate can fall in the high-6% range, depending on several factors, such as the type of mortgage, loan term, and individual financial circ*mstances. To understand what a favorable mortgage rate looks like for you, get quotes from a few different lenders and compare them.
The average 30-year fixed mortgage rate as of Thursday was 6.99%. By the final quarter of 2025, Fannie Mae expects that to slide to 6.0%. Meanwhile, Wells Fargo's model expects 5.8%, and the Mortgage Bankers Association estimates 5.5%.
Before a recession hits, home prices are typically at an all-time high. This means that selling your home before a recession will result in a higher profit between the purchase price of the real estate and the sale price, which can increase your capital gains taxes.
A lower fixed interest rate leads to lower monthly mortgage payments. However, it may lead to higher closing costs due to discount points charged by lenders. Conversely, a higher interest rate could mean lower closing costs but result in higher monthly payments over time.
In an interest rate buydown, the seller pays mortgage points on the buyer's mortgage, lowering the interest rate. Permanent buydowns are more beneficial than price reductions for the buyer and the seller. Also called seller buydowns, they're better for buyers who plan on living in the same house for a long time.
Mortgage rates will decrease in 2024, and buyers will pay fewer discount points. By summer, first-time home buyers should expect current mortgage rates near 4.25 percent.
What will interest be in 2026?
For the end of 2026, the median dot now shows a target range of 3% to 3.25%, versus 2.75% to 3% three months ago. And officials' median longer-run estimate was for a target range of 2.5% to 2.75%, also a quarter of a percentage point higher than in December.
Tracker mortgage repayments are usually tied to the base rate plus a certain percentage. So, if the base rate rises by 0.25% for example, your repayments will increase by this amount. If the base rate goes down, you could pay less.
Selling your home is a major way to reduce debt. If your mortgage payment is bigger than you can afford, it may be smart to sell your house and downsize. Or if you're struggling with bills, getting money for the value of your home can help you pay down your debt.
How much equity should you have before you sell your house? At the very least, you want to have enough equity to pay off your current mortgage, plus enough left over to make a 20% down payment on your next home so you can avoid paying private mortgage insurance (PMI).
But here's the kicker: I anticipate a leveling off as the economy stabilizes and mortgage rates start to come down.” Lord: “The rate of growth in home prices will decline in the coming years with the expectation for a 2.5% increase in 2024, 3% increase in 2025, 3% increase in 2026 and 2027, and 2% rise in 2028.
