As a general rule, rising mortgage rates will have an impact on your purchasing power. This is because lenders offer loans at a higher interest rate to offset the increased risk associated with lending money when rates are high.

When rates rise, you'll need to finance a larger loan amount in order to purchase the same property. You may need to either save more for a down payment or look for a less expensive home. In addition, you may also need to adjust your budget to stay within your comfort level, as rising mortgage rates can also limit how much you can afford to borrow. Your monthly payments will increase as rates go up.

If you are in the market for a new home and mortgage rates have been on the rise lately, should you wait for them to go down before purchasing?

Most experts are projecting home prices will appreciate by around 2% in 2023. While it's true some are calling for depreciation, the vast majority are forecasting appreciation.

According to Realtor.com about where rates could go from here, "Many homebuyers likely winced . . . upon hearing that the Federal Reserve yet again boosted its short-term interest rates by three-quarters of a percentage point—a move that's pushing mortgage rates through the roof. And the already high rates are just going to get higher."

If you have the opportunity to buy your dream home now, it may be wise to act sooner rather than later. It is often said that the best time to buy is when prices are rising. This is because you will be able to buy at a lower price than if you wait until prices have peaked. Additionally, if you wait too long to buy, you may end up being priced out of the market entirely.

Considering renting while you wait it out is not the best alternative, as rents are also increasing. It may not be the most cost-effective decision. 72% of landlords plan to raise the rent on one or more of their properties in the next year. As Nadia Evangelou, Senior Economist and Director of Forecasting at the National Association of Realtors (NAR), says:

"There is no doubt that these higher rates hurt housing affordability. Nevertheless, apart from borrowing costs, rents additionally rose at their highest pace in nearly four decades."

In this case, taking advantage of current prices can save you money in the long run and escape the cycle of rising rents. Another benefit of buying now is that you can start building equity in your home. Equity is the difference between the market value of your home and the amount you still owe on your mortgage. As your home appreciates, so does your equity. Homeownership is a powerful wealth-building tool.

Home equity can give you a nice cushion during tough economic times. According to Mark Cussen, Financial Writer at Investopedia, "Real estate is one of the time-honored inflation hedges. It's a tangible asset, and those tend to hold their value when inflation reigns, unlike paper assets. More specifically, as prices rise, so do property values."

Additionally, one way to protect yourself from inflation is to lock in a low-interest rate on your mortgage. With a fixed-rate mortgage, your monthly payment will stay the same for the life of the loan, regardless of how much prices go up. This can give you peace of mind and help you to manage your finances better as you can stabilize some of your monthly expenses.

Considering all these benefits, which makes more sense, buying or renting? Should you wait for the mortgage rates to go down before purchasing? No – the longer you wait, the more it will cost you.

Contact me today to discuss your options and get started on the path to owning your dream home.