Real estate expert advises prospective home buyers not to just look at 30-year fixed-mortgage rate

Samantha DeBianchi, founder of DeBianchi Real Estate, encouraged prospective home buyers to look beyond a 30-year fixed-mortgage rate and explore other options when considering purchasing a home. 

Speaking on "Mornings with Maria" on Monday, the real estate expert recommended "shopping out mortgage rates" as the 30-year fixed rate sits above 5%. 

DeBianchi said when she bought a home about five months ago when the 30-year fixed-mortgage rate hit over 5%, she did her research and was able to lock in "a 3.375 for a 10-Year ARM (Adjustable-Rate Mortgage)."

"A 10-Year ARM, adjustable-rate mortgages, aren’t for everyone," she noted.

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DeBianchi then explained that it could be a great option, however, "if you feel that you are going to be able to have the financial ability to pay it back after 10 years or if you see yourself living there 10 years." 

She also encouraged buyers to consider that "within those 10 years, you could also refinance" and "could potentially get something even less as far as far as a mortgage rate."

"I really suggest that people don’t just look at 30-year fixes," she stressed, noting that the 15-year fixed mortgage rate is currently less than the 30-year fixed mortgage rate and sits under 5%. 

"So it is so important not to just keep going to that number," she said. "Shop around, look at different lenders, go to your bank and find the best price scenario that is for you." 

DeBianchi provided the insight shortly before it was revealed that confidence among builders in the U.S. housing market plunged more than expected in August to the lowest level since the beginning of the COVID-19 pandemic as painfully high inflation and rising borrowing costs forced potential buyers to pull back.

The National Association of Home Builders/Wells Fargo Housing Market Index, which measures the pulse of the single-family housing market, fell for the eighth consecutive month to 49, marking the worst stretch for the housing market since the 2008 financial crisis.

The index can range between 0 and 100 with any print over 50 indicating positive sentiment. Any reading above 80 signals strong demand. The gauge has not entered negative territory since a brief – but steep – drop in May 2020. 

The index has fallen considerably from just one year ago when it stood at 80. It peaked at a 35-year high of 90 in November 2020, buoyed by record-low interest rates at the same time that American homebuyers – flush with cash and eager for more space during the pandemic – started flocking to the suburbs.

The interest rate-sensitive housing market has started to cool noticeably in recent months as the Federal Reserve moves to tighten policy at the fastest pace in three decades. Policymakers already approved a 75-basis point rate increase in both June and July.  

The average rate for a 30-year fixed rate mortgage climbed to 5.22% for the week ending Aug. 11, according to recent data from mortgage lender Freddie Mac. That is significantly higher than just one year ago when rates stood at 2.86%.

"The typical mortgage has gone up by about $500 a month since January," DeBianchi said from South Florida. 

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"The market is slowly cooling and we’re feeling it here. We are feeling it across the country," she continued, noting that is the sentiment among many realtors she has spoken with in different markets. 

Fox Business’ Megan Henney contributed to this report.