PITTSBURGH (KDKA) — Home mortgage interest rates above 6 percent hit a 14-year high.

“Until inflation is under control, you can expect rates to continue to creep up,” said Jim Martin, a local mortgage broker.

Martin said that while home mortgage rates are not directly controlled by the Federal Reserve, what the Fed does does have an impact by controlling inflation. The Fed is expected to raise interest rates for the third time in a row on Wednesday by three quarters of a percentage point.

“Once the Fed gets their policy in place, they’ll think they’ve had enough rate hikes and you’ll see things start to taper off. If economic activity starts to fall because of the rate hike, then you’ll see our rates level off and maybe come down a little bit,” Martin said.

In other words, mortgage rates go down when inflation seems under control. Given the uncertain future, is this a good time to buy a home, a first home or a larger home for a growing family? Martin said it depends on your situation.

“If you’re renting and your monthly rent is skyrocketing, I would use that time to buy a new home,” Martin said. “If you’ve already renegotiated your lease and you’re locked in for the next 12 months and you want to move, yes you can. But now, when you are faced with this dilemma, should I sign a new lease or buy a new home? “I would definitely buy a new house.”

In many cases, the monthly mortgage payments will be less than the monthly rent. If you already own a home and need to buy that bigger home and can afford the higher monthly payments of 6 percent, then go for it, Martin said. But you can also hold off on buying a bigger home until rates come down.

“When the Fed raises its rates, there’s usually a recession within the next 12 months,” Martin said. “Whether it’s a minor recession or a major recession, there’s usually a recession. And almost every time there’s been a recession, our mortgage rates have fallen. So hold on.”

Existing homeowners are already locked into their mortgage rates, hopefully at rates below 4 percent. The good news for mortgage borrowers today is that you can always refinance to a lower rate once those rates start to fall.


High mortgage interest rates make it more expensive to finance a home purchase and qualify for a loan

02:24

https://www.cbsnews.com/pittsburgh/news/buying-a-home-higher-mortgage-interest-rates/

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