After two years of record-breaking low interest rates and trillions pumped into the economy (and by economy I mean small businesses but more-so families of congressmen, the Catholic church, and all the other massive companies that applied for forgivable PPP loans they didn't deserve), the Fed has announced they will increase interest rates several times this year.
There is not a perfect correlation/relationship between what the Fed does and mortgage rates, but it is fair to assume rates will be higher than they were last year, and that's what we've seen so far. Of course, everyone loves a clickbait headline so there are a lot of exaggerated claims. But I think this is more of a "back to normal" move than anything.
What we saw in 2020 and 2021 was an environment with the lowest mortgage rates on record. I know people who refinanced or got new mortgages at 2.6%, which seemed to be the floor. And then banks decided it wasn't worth letting people borrow money any more cheaply (also they ran out of manpower to handle the volume of loans). We have already gone up about a point since the actual bottom.
Will it impact the market?
Yes and no.
Despite what non-experts in my comments section yelled at me, interest rates on mortgages are not expected to hit astronomical highs this year. Depending on which economist/real estate strategist you ask, rates are expected to end the year between 3.4% and the low 4%s, meaning they will be similar to what we saw pre-pandemic.
Because we aren't suddenly expecting a jump to 6%, it is unlikely to cause any real pricing changes, and while it will decrease the purchasing power of some buyers, especially first time buyers trying to stretch their budget while fitting a co-op's requirements, it shouldn't eliminate the majority of buyers.
Do I expect a slightly less frenzied market? Possibly. But it will also be hard to differentiate what is a seasonal fluctuation and what is rate-related, since the spring market is always the busiest part of year. So people "getting in while rates are low" and people "buying in the spring because new inventory is coming on market" will be indistinguishable.
As always, the best time to buy is when it makes sense for you, your finances, and your life. When that time comes, my job is to put you in the best position possible. You can't time the market; you can't time rates. Just do you, baby.