August 15, 2022

Increasing Mortgage Rates and How They’re Affecting the D.C. Housing Market

Remember when mortgage rates were at their lowest point in 2020 and 2021? As a response to the coronavirus pandemic, the 30-year fixed rate fell to 3 percent for the first time and kept falling to a new record low of just 2.65 percent in January 2021. Fast forward to today, and interest rates are looking very different. They continue to increase, with the average 30-year fixed rate at 5 percent at the time of this writing. 

Let’s talk more about why mortgage rates are increasing in the D.C. area, how long we can expect them to trend in this direction and how the housing market will be impacted.

How Interest Rates Affect the Housing Market

Mortgage loans come in two main forms – fixed rate and adjustable rate. The interest rate is the amount charged by a lender to a borrower to use their assets. There are a number of factors that affect interest rates, such as the state of the economy. 

A country’s central bank sets the interest rate – in the U.S. it’s the Federal Reserve Board – and each bank uses this to set their APRs (annual percentage rates). Central banks tend to raise their interest rates when inflation is high because it helps bring inflation back down. High interest rates discourage borrowing and reduce consumer demand. 

Since inflation is increasing, the cost of everything is going up, and this includes mortgage rates. Even though interest rates are high right now, they are actually a good deal by comparison. The long-term average for a 30-year mortgage in Washington D.C. is around 7 percent. 

D.C. Mortgage Rate Predictions for 2023 

Some experts predict that mortgage rates will hover around 5 percent next year, while others say they expect rates to reach 6.7 percent by 2023 and 8.2 percent by 2025. If the latter does happen, it will be the first time that the average 30-year rate moves past 8 percent since 2000. 

Ongoing inflation is a huge concern for consumers and investors alike. The market is unpredictable, and there are many external influences that are affecting the U.S. economy, including the Ukraine/Russia conflict. 

Hopefully, mortgage rates won’t go up to 8 percent in the next few years, but it’s safe to say that they won’t be falling, either. Therefore, if you’re in the market to purchase a house or sell yours, now might be the best time to make these decisions. Otherwise, you could be working under much different circumstances. 

With Rising Mortgage Rates and Inflation – NOW is a Great Time to Sell Your D.C. House! 

Things are quickly changing in D.C.’s housing market. The market is slowing down and giving buyers more control, gradually shifting over to a buyer’s market. Consider that 40 percent of listings currently on the market in the D.C. area have undergone a price reduction. 

If you have a property that you want to get rid of, now is probably the time to do so. We will be moving into the winter months before you know it, and the market cools down considerably at this time. Right now, you can likely sell your Washington D.C. house for more money, in a shorter amount of time and with fewer buyer demands.

4 Brothers Buy Houses will pay cash for your D.C. house. We use our own money – no financing – which helps the process move quickly. We can start the closing paperwork once you accept our offer, and you don’t have to worry about appraisals, inspections, home improvements, repairs, closing costs or realtor commissions. 

Contact our team of cash buyers in Washington DC today to get a free cash offer on your house. It’s no obligation, so see if the numbers work for you!