• When the Federal Reserve (Fed) increases reference rates, mortgages and other financial products increase, so here we tell you how to deal with it intelligently to buy a house at an affordable price

Inflation does not yield; Neither does the Federal Reserve (Fed). Last Wednesday, the central bank again raised interest rates by 75 percentage points, leaving the reference rates at 3%. With this, all banks and lenders raise the price of their financial products, such as credit cards, personal and mortgage loans. Despite these increases, there are ways in which you can access, for example, a mortgage with the lowest interest rate in the market.

During the press conference on Wednesday, Jerome Powell, chairman of the Fed, anticipated that it is very possible that the central bank will continue to make “more interest rate increases in the future”, until inflation is controlled. Rates are expected to rise by the end of 2022 much more than was predicted three months ago and are likely to remain high for a longer period of time.

However, despite the rate hikes, it takes a few weeks for interest rates on financial products, such as credit cards and loans, to feel the effect of the hike. The average rate for a 30-year mortgage is 6.23%, according to the real estate portal Zillow. Because we are talking about a national average, there are some people who can access a mortgage loan for less than that, close to 5%. How? Here are the basics to achieve it.

1. Have a good credit score

The credit score is essential when applying for any loan, be it a credit card, a personal or mortgage loan. Generally, you must have a very good or excellent credit score, around 740 or higher, to qualify for the lowest mortgage rates on the market. You even have the possibility of acquiring a larger amount, although other characteristics are required for that.

2. Give a high down payment

Even if you may not have a high credit score, the down payment is important when buying a home, as it may allow you to access a mortgage with a shorter term than the usual 30 years. As you get a 20, 15 or 10 year mortgage, interest rates will be lower, even if that means your monthly payments are considerably higher.

According to Zillow, current average interest rates are:

• 6.03% for a 20-year mortgage
• 5.44% for a 15-year mortgage
• 5.39% for a 10-year mortgage

Variable rate mortgages also tend to have relatively lower interest rates, the problem is that they work like a credit card, their rates can go up and down over time, based on the central bank reference rates. Although you may have a high interest rate right now, it is possible that over time they will be reduced and, with it, also lower your mortgage and your monthly payments.

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