The average mortgage rate in the past had reached 9 percent on a 30 year fixed mortgage yet the majority of the buyers today didn’t witness that rate. The buyers in today’s real estate market are millennials and have only experienced rates lower than the 5 percent mark. With mortgage rates increasing millennials will begin to understand that credit isn’t always cheap. The increase just crossed the 5 percent mark after it sat right below 3.5 percent a year ago. It is surprising to many because it is the first time in eight years that mortgage rates have moved higher and could cause an issue along the future.
Even though 5 percent is among history’s lowest in combination with other challenges can cause potential buyers to hold back because they fear they will not get approved or not be able to make future payments. Many fear yet others see this as an opportunity to buy a house. However, the number of people who are concerned to keep their jobs and increase their income is growing. The home sales have been changing throughout the year causing the expected annual sales to be much lower in comparisons to last years. The additional percentage above one point to last years can add up to $200 towards a monthly payment on a $300,000 loan. That increase can also affect borrowers because many won’t qualify for a loan due to the restrictions leaners have to control debt carried based on income. This knocks them out of the market and prevents them to purchase a home they might have wanted. Buyers that have a need to buy now are forced to continue looking at the low inventory that is available to them and determine if any meets their need or deciding if they can even afford it.
The stronger economy has demonstrated an interest in housing but the record low supply has caused an increase in prices relatively fast. The higher rates and increasing home prices have caused affordability to be a top issue in today’s market. The higher mortgage rates can be an issue not only for buyers but also for sellers. The increase in mortgage rates can cause the house price to decrease in order to decrease the amount of time a house sits in the real estate market. That can mean buyers might have a chance to benefit from the increase of mortgage rates. Since many buyers are pushed out of the market with higher mortgage rates sellers are quickly dropping their initial expectations to speed up the process of their investment.
For more information on Mortgage Rates click here.
Recent Comments