NEW YORK, March 9, 2022 (Newswire.com) - As the Russia-Ukraine conflict continues to escalate, nervousness in the global markets is driving up interest rates on mortgages and other types of loans. This is causing problems for home buyers and could have a ripple effect throughout the economy. If you're considering getting a mortgage soon, here are a few things you need to know first.
The impact on mortgage rates
Mortgage rates have been on the rise since the beginning of the Russia-Ukraine conflict, as investors worry about the stability of the global economy. The average interest rate on a 30-year fixed-rate mortgage is now 4.14%, up from 3.85% in January. The rise in rates is making it more difficult to purchase a home.
The impact on home buying
If you're looking to buy a house, your monthly payments could go up if your prospective interest rate is higher than the rate on your existing loan. And if rates keep going up, it could be harder to afford a house in the future.
The rising interest rates and increasing home-buying costs are likely to significantly impact the housing market, particularly in areas where prices have been rising rapidly. In some cases, this could lead to a decrease in home prices, which sounds great, but could be combined with an increase in the number of people who are unable to buy a house, tanking the market.
The impact on the global economy
The conflict has taken a toll on the economies of both countries, with Russia experiencing significant inflation and Ukraine experiencing a decline in exports. In addition, the war has caused a decline in the value of the Russian ruble, impacting global commodity prices.
With the additional sanctions put into place, raw material prices used in tech like palladium and neon have begun to skyrocket as chip manufacturers scramble to keep their supply chains open.
Finally, interest rates are rising due to the conflict on everything from credit cards to options for a home equity loan for debt consolidation, making it more expensive for people to borrow money across the board.
What should you do if you want to buy a house or refinance your mortgage?
If you're interested in buying a home or refinancing your mortgage, you should speak to a financial advisor to get a better understanding of the possible impacts of the rise in interest rates on your financial situation. Depending on your unique situation, they may advise you to wait or offer alternative options for getting your mortgage financed.
The bottom line
The Russia-Ukraine conflict has a significant impact on the housing market and the overall economy. Homebuyers and businesses are already feeling the effects, and the situation is likely to worsen before it gets better.