How to Navigate These Crazy Interest Rates by Scott Andrew Alpaugh

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How to Navigate the Current High Interest Rates When Buying a Home


Buying a home is one of the most important financial decisions you can make in your life. However, it can also be a daunting and stressful process, especially when you have to deal with high interest rates. In this blog post, we will share some tips and strategies on how to navigate the current high interest rates when buying a home, and how to make the best decision for your situation.


What are the current interest rates and why are they high?


Interest rates are the cost of borrowing money from a lender, such as a bank or a mortgage company. They are expressed as a percentage of the loan amount, and they vary depending on various factors, such as the type of loan, the term of the loan, the credit score of the borrower, and the market conditions.


According to the latest data from Freddie Mac, the average interest rate for a 30-year fixed-rate mortgage in the US was 4.13% as of November 2, 2023. This is the highest level since July 2017, and it represents an increase of 0.87 percentage points from a year ago.


There are several reasons why interest rates are high right now. Some of the main ones are:


- The Federal Reserve has been raising its benchmark interest rate since December 2015, in response to the improving economy and inflation expectations. The Fed's interest rate affects the cost of borrowing for banks and other lenders, who then pass it on to consumers.

- The demand for housing has been outstripping the supply, creating a seller's market and driving up home prices. Higher home prices mean higher loan amounts and higher interest payments for buyers.

- The global economic and political uncertainty has increased the demand for safe-haven assets, such as US Treasury bonds. This has pushed down their yields, which are inversely related to their prices. Mortgage rates tend to follow the movement of Treasury yields, so lower yields mean higher mortgage rates.       I hope you are enjoying my content!

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