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It could become a lot more challenging to buy a home in the coming months – or it may have just gotten a whole lot easier. The reasons: After hitting historic lows, mortgage interest rates are going up. The U.S. Federal Reserve just announced that it will taper its purchases of bonds and mortgage backed securities. This is expected to keep mortgage rates higher. These higher rates could make homebuying more expensive for many as their monthly payments get bigger, but higher rates could also prove to be an advantage for buyers in some markets by keeping prices in check and lessening competition. If buyers aren't spending as much on their homes and engaging in crazy bidding wars, that could make homebuying less expensive. So with this current housing shortage, rising rates could either be a blessing or a curse for prospective homebuyers. Leonard Kiefer, deputy chief economist at Freddie Mac, warns "It's going to be less affordable a year from now than where we are today." His team forecasts that rates will reach 3.2 percent by the end of the year, and 3.7 percent by the end of 2022. At the same time, housing prices will go up 7 percent in 2022 according to Freddie Mac's price index. That's still better than the explosive 16.9 percent growth of 2021. Low rates, which bottomed out at 2.65 percent helped fuel the explosion in the early days of the pandemic. Homes cost more, while monthly payments stayed the same as they were when the rates were higher. But historically speaking, rates even in the 3 percent range are still very low, less than the current rate of inflation (5.4 percent in September). The big picture suggests price increases will at least have to slow down. Median incomes have barely grown and there just aren't enough people who can afford current prices. If prices get higher, the potential buyer pool shrinks. Price growth may slow down, but at a more gradual, manageable pace. Mortgage rates aren't the only factor driving the housing market. The main problem is a lack of homes for sale. Historically low rates encouraged more people to buy a house, but the number of homes for sale dried up – and the residential construction industry hasn't caught up. Sources: www.realtor.com, www.freddiemac.com Will Rising Mortgage Rates Make Home Buying More Expensive or Less? REAL ESTATE NEWS REAL ESTATE NEWS | LIFE IN SOLERA | DECEMBER 2021 | 13 By Glenn and Nona Bradd, Realtors and Residents