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Columns | Go Far With Kovar

Should We Buy When Mortgage Rates Continue To Surge

by Taylor Kovar

August 31, 2023

Hi Taylor - I saw a headline that said "U.S. Mortgage Rates Continue To Surge" and it made me depressed. What does this mean for people looking to buy a house? Will it ever happen?

Hi Stacey
- No two ways about it—rates are HIGH. I think interest rates are the highest they've been in over 20 years. So, no, it's not the "best" time to buy a house. That said, buying a house is never off the table. It's an investment worth making if you're in the right position to make it.

1. Don't waste time comparing. If you're distressed that interest rates have gone up so much in the last two years, try to let go of that. Rates were in the high teens in the 1990s when the economy was booming and people bought a lot of properties back then. Everything is relative at this moment, so don't lose sleep over what would have happened if you bought a house in 2016 because that isn't going to help your situation. Instead, take stock of what you have now and what you're hoping to accomplish.

2. Will rates go down?
Sure. We don't know when or by how much, but rates will always rise and fall depending on the strength of our economy. We're still working through a year-long battle against inflation, so the current situation is not the new normal. That said, it'll take a minute for rates to adjust and it might be a while before they get significantly lower. They could certainly go up more before they come down. We might be on the precipice of an extended run of really high APRs. None of us should be in the business of predicting the future, because that's not a realistic way to make smart financial decisions. The minute you let guesswork inform your homebuying, you're putting yourself at risk.

3. Think about your buying power. While high mortgage rates cost you in the long run, it doesn't affect the amount of money in your bank account. Do you have a downpayment ready to go? Can you buy and flip a home to build up some equity and buy a bigger house? Are you paying too much in rent and need to find an alternative? Interest rates are just one of many factors for someone looking to buy a house. It's easy to get scared off by the thought of spending extra thousands of dollars, but if you really want to buy a house you should always be thinking of ways to make that happen.

Interest rates have been surging. It's not a lot of fun to watch the rates shoot up. Nevertheless, we shall persevere and buy homes and sell homes and continue to thrive. Don't give up, Stacey!
Taylor Kovar

"Go Far With Kovar" August 31, 2023 Column
Legal Disclaimer: Information presented is for educational purposes only and is not an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. To submit a question to be answered in this column, please send it via email to Question@GoFarWithKovar.com, or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.


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