Moving to Greater Seattle presents an opportunity to establish roots in one of America’s most sought-after locations. Whether you’re seeking a change of scenery or pursuing career advancement, the Seattle area offers an incredibly appealing lifestyle. However, it’s important to consider the financial implications of buying in Western Washington, especially when it comes to interest rates, before proceeding.
Currently, the median listing price for homes in the Greater Seattle area stands at $790k, reflecting a 1.4% year-over-year increase. While some might consider this a relatively high cost of entry, properties in this region are renowned for their ability to retain and appreciate in value, positioning real estate as a sound long-term investment for securing your family’s future.
If you’re ready to familiarize yourself with interest rates, read on. Here’s what you need to know about them and how they impact mortgage lending in the Seattle area.
Understanding Mortgage Rates
Your interest rate plays a pivotal role in your monthly mortgage payment. Given the substantial nature of real estate investments, even minor fluctuations in rates can have a significant impact on your financial obligations each month.
In January 2024, the average long-term U.S. mortgage rate stood at 6.69%, marking a six-week high. While this may appear steep compared to recent years, historical context reveals that mortgage rates were substantially higher in the past. For instance, in 1990, rates soared to 10%, and in 2000, they hovered around 8%.
Inexperienced homebuyers looking for a mortgage in the Seattle area may feel rates are high, but the 2.5% to 3% mortgage rates seen during the pandemic were historically low. In other words, mortgage rates had NEVER been that low before in the entire history of the country! Today, home buyers in the Seattle area are enjoying mortgage rates that are lower than the peak rates in 2023, and about average historically.
Additionally, many believe today’s mortgage rates are temporary due to the Federal Reserve’s battle to lower inflation. Experts widely expect rate cuts in the future. One expert talking to Forbes said, “Mortgage rates will be at least a full 2% lower by 2025.”
It’s just one reason why buying a home in the Greater Seattle area in 2024 could be an excellent long-term investment.
The Current Seattle Area Market Dynamics
While some buyers may view the current mortgage landscape as unfavorable, the prevailing housing market conditions present a unique window of opportunity for savvy purchasers. Projections indicate a decline in mortgage rates within the next 12 to 18 months, signaling a favorable environment for securing a home today and possibly refinancing into a lower mortgage rate later.
Notably, the real estate market in the Greater Seattle area remains highly competitive. However, January 2024 data revealed a 20.6% surge in newly listed homes. This means prospective buyers have more options to choose from, and added competition means an increased likelihood of getting a good price on your dream home.
Rates Change DAILY:
Many prospective home buyers are unaware that mortgage rates change daily, and sometimes more than once per day. Mortgage rates are influenced by the current inflation rate and the volatile bond market. Bond traders drive bond yields (interest rates) up when they are worried about inflation, and bond yields fall as inflation fears cool. Short-term interest rate movements are virtually impossible to predict. Home buyers face the difficult task of choosing to “lock in” a rate now or “floating” with the market. A “locked” mortgage rate gives the home buyer the confidence of knowing exactly what their monthly payment will be when they close the loan. “Floating” means the home buyer’s monthly payment will go up and down with the bond market until the mortgage interest rate is locked. When “floating” the home buyer must decide what would make them feel worse: locking a rate now and seeing a slightly lower rate available later, or floating in hopes of getting a lower rate and then being forced to lock at a higher rate when rates go up.
Home buyers in the Greater Seattle area should get “pre-approved” for a mortgage before looking for a home so they are prepared to lock their interest rate as soon as they find a home to buy. Homebuyers who don’t keep up with the current rates are often shocked to find that the rate they saw when they applied no longer applies upon closing. Your rate can change at any stage until it’s formalized. Note that this rule applies even if you lock in your rate. For example, if your credit score deteriorates in the few months between applying for a mortgage and closing, your rate could see an adverse effect.
Focus on What You CAN Control
Mortgage interest rates are heavily influenced by the state of the economy, Federal Reserve interest rate policies and the volatile bond market. You cannot control these factors, so it makes little sense to stress about them.
Instead, focus on the factors that affect your personal mortgage interest rate, including:
- Your credit score (700+ for the best rates)
- Debt-to-income ratio (keep your debt level and payments as low as possible)
- The down payment amount (save up as much cash as possible)
- Type of mortgage (for example, FHA, VA, USDA, and other government-backed mortgages offer the lowest rates)
- Your loan term (30-year or 15-year? Fixed rate or adjustable rate? etc.)
There is more to buying a home than getting the “lowest rate.”
At Best Mortgage® our rates are competitive with legitimate local banks and mortgage companies. What sets us apart is going the extra mile for our clients, giving you “Honest Advice You Can Trust”® Anyone can “quote you a number” on the phone – but what really matters in buying a home is closing on time! If you miss your closing date by even one day, you can lose your “earnest money deposit” costing you thousands of dollars and possibly even lose your dream home. If you’re ready to buy your dream home in the Greater Seattle area, turn to Best Mortgage® to secure the home loan that’s right for you. Just fill in our Contact Form or call us at (425) 649-6000 to get started now!
