How Homebuyers Can ‘Rate-Proof’ Their Budgets in a Volatile Mortgage Market

Homebuyers face severe uncertainty this fall amid surging mortgage rates and stubbornly high living costs, but those who prepare and take stock of their finances early can shield their budgets from unexpected spikes. Last week, the average rate on 30-year fixed home loans surged to an 18-month high of 6.95%, propelled by climbing 10-year Treasury yields as the Federal Reserve increased its interest rates for the first time in three years. These developments have made home shoppers question whether they can manage monthly payments on their purchase, as reflected in a slowdown in August's existing-home sales. To offer jittery buyers guidance on navigating market uncertainty, Realtor.com® researchers analyzed monthly mortgage rate shifts dating to 2000, establishing clear benchmarks for how much rates typically fluctuate over time—and how risk-averse buyers can adjust their budgets accordingly. "Rate-proofing for potential buyers right now is super important because they can’t build assumptions for their finances on the chance that interest rates may go down," Ralph DiBugnara, president of Home Qualified, tells Realtor.com.“They need to be comfortable with the monthly payment, whether...