After peaking around 7.8% in October 2023, weekly average rates on 30-year fixed mortgages were just under 6.9% in the first week of March 2024. Any other time, we’d be singing from the rooftops, but we’re nowhere near the historic lows we saw just a few years ago. Still, any relief is good news.
Although average mortgage interest rates have seen a slight decline over the past few weeks, they’re still twice as high as just one year ago. Meanwhile, median housing prices in the Bay Area are on the rise despite a 14% drop year over year. With this level of volatility, a fixed-rate mortgage makes more sense every day. But again, personal circumstances may do the deciding for you.
For first-time homebuyers, the choice of mortgage rates requires careful consideration. Don’t go with an ARM just for lower monthly payments. You may get more than you bargained for.
Choosing an ARM may seem like a good idea when rates are low, but it’s always a gamble. A quick shift in the economy could send rates sky high, and you’re stuck riding the wave. If your ultimate goal is lower monthly payments, it might make more sense to choose a fixed-rate mortgage or look for a home with a lower price.
Regardless of which rate you choose, you should also ask yourself how long you plan to live in the new home. If this is a “starter” home, you might be able to get away with an ARM, especially if rates are low and the economy is fairly stable. If you’re in for the long haul, a fixed rate is absolutely the safer bet for your finances.
