Will Mortgage Rates In Wisconsin Stay Low In 2022? | Local News I Racine County Eye

Will Mortgage Rates In Wisconsin Stay Low In 2022? | Local News I Racine County Eye
Written by Publishing Team

Over the past two years, home prices have skyrocketed in Wisconsin and across the United States. This is partly due to a lack of supply caused by delays in construction due to the pandemic, as well as a lack of people willing to sell their homes. However, one of the main reasons people continue to buy high-priced homes is the record low mortgage rates.

The course of the real estate market during the pandemic has been somewhat unexpected. Many economists assumed that job losses and business closings would make property sellers struggle to find buyers. They predicted that real estate prices would collapse.

The fact that the opposite has occurred may come as a surprise, but it is somewhat by design. In the early months of the pandemic, the Federal Reserve cut interest rates in hopes of spurring growth in a collapsing economy. The real estate market recovery and subsequent rise in value are largely due to these (and others) steps.

For someone looking to buy a home in Wisconsin, this presents a dilemma. Wisconsin homes are expensive right now, but mortgage rates are as low as they will be for the foreseeable future. Should they rush to buy a home if mortgage rates rise?

Mortgage rates in 2022

If you compare the best mortgage rates, you’ll see that the 30-year mortgage rate is currently close to 3.75%. This is low, but well above the record low of 2.65% at the beginning of 2021. This makes sense in the current economic context.

In December 2021, inflation was 7% higher than the previous year. This is the biggest rise in inflation since 1982. One of the measures the Federal Reserve is likely to take to stem the rising cost of living is to raise interest rates.

In October 2021, the Mortgage Bankers Association projected that mortgage rates would hit 4% by the end of 2022. Now it looks like we’re really heading towards 4%, and the truth is, rates could go up dramatically.

So, as a potential buyer in Wisconsin, should you take advantage of the lower prices?

Wisconsin real estate prices

At the beginning of 2020, the median home price in Wisconsin was $198,000. By the end of 2021, the average price reached 244 thousand dollars. Home prices are rising steadily and don’t seem to be stopping.

If you are looking to take advantage of lower interest rates, you will have to accept that your home will be very expensive nonetheless. You’ll pay much more for much less, regardless of mortgage rates.

You may be willing to do so, based on the expectation that the value of your home will continue to rise. However, this is not guaranteed. As mortgage rates rise, it is possible that property values ​​will begin to stabilize, if not decline. The real estate market is unpredictable at the best of times, but there is reason to be careful as things go on.

Mortgage rates will continue to rise, but it is unclear whether real estate in Wisconsin will do the same. By purchasing a home now, you can take advantage of low prices. It is up to you to decide if it is worth the risk of buying high-value real estate to get these prices.

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