LEXINGTON, Ky. — In the United States, the 30-year fixed mortgage rate sits at approximately 8%; the highest rates Americans have seen since the year 2000.

What You Need To Know

  • In October, mortgage rates reached 8% for the first time since 2000

  • Months ago, rates sat at 6%, now buyers are more hesitant to make an offer according to a local real estate agent 

  • A Lexington mortgage broker said home prices will continue to rise 

  • The broker said he does not expect to see a housing bubble

Just months ago, the rate sat at 6%, but that 2% difference could make the monthly payments too expensive for Kentuckians looking to buy a house. Nick Ratliff, a real estate agent in Lexington, said these rates are some of the highest prospective buyers haven’t seen in nearly two decades.

“That number eight really puts people off,” Ratliff said.

Ratliff said he has worked with many prospective buyers who have said they’re waiting to buy until rates fall back to 6%.

“They’re still looking and getting into homes, but I can’t tell you how many conversations we’ve had lately where people are like we like it but they’re going to think about it a little more,” Ratliff said.

Mortgage rates have been on the rise since the end of 2021 and beginning of 2022. But, Marty Preston, a divisional president for Benchmark Mortgage, said this doesn’t mean it’s the wrong time to buy.   

“If you’re looking at it from an investment standpoint, if home prices are going up at six or 7%, your home value is going to go up substantially,” Preston said.

Preston said a lot of people are concerned about a housing bubble but explains he does not believe that will be the case.

“Because of the last housing bubble, we got so far behind in new home building that the population growth and rate of new buyers entering the market surpasses the number of new homes being built by so much that as long as there’s three, four or five buyers for every home that’s going up on the market there cannot be a bubble,” Preston said. “Whereas in 2004-2006, we had the exact opposite scenario; we had a lot of foreclosures, and we also had more homes being built than new people entering the market, so that meant there was a lot more supply than there was demand.”

Although the number eight can be unsettling, Ratliff and Preston say it doesn’t mean this is bad time to buy if you can afford it.

Ratliff suggests to some buyers looking to move up that keeping their smaller home as a rental option as the rental market is also in demand.

“If you want to be an investor, I think this is the time for people to look at that aspect because you’ve got your current home locked in at such a low rate it makes renting it very viable,” Ratliff said.

Preston said over time, a buyer in this market would actually make money.

“Home prices are not going to be going to be coming down, they’re actually going to be going up so for that reason it’s a good time to buy as long as it’s the right thing for your personal budget,” Preston said.

Preston said the Mortgage Bankers Association and Fannie May/Freddie Mac predict rates as low as 5.5-6% by the end of 2024.

Both Preston and Ratliff said if someone has to buy or can afford to buy, there are refinancing options to use when rates go back down.

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