You may have read in the news recently that interest rates are starting to climb. As interest rates increase, it could have a ripple effect that includes the decline of property values, less folks buying homes, a surplus of homes remaining on the market and more.
As you can probably imagine, your clients may have just a few of the following questions:
- What does this mean for my family and me?
- Will there be an influx of bank-owned homes about to hit the market?
- Will this create a flood of listings on the market?
- Are we about to shift to a buyer’s market?
- Are we finally facing equilibrium?
So what do experts in the industry think about these questions and more?
Today we’re going to take a quick tour around the web to show you what some of the top journalists and researchers are saying about interest rates suddenly shifting skyward.
Marcy Gordon and Josh Boak, Associated Press
“The low rates have helped boost home sales and prices this year. But there are economic unknowns as the new administration’s economic policy starts to take shape. And constraints on home purchases like tight credit standards and affordability remain, bolstered by market expectations of further rate increases.
Steadily rising rates would ultimately limit the number of possible buyers and how much they can afford to pay. And existing homeowners who might otherwise be looking for an upgrade could choose to stay put rather than face higher interest costs.”
Nathan Bomey, USA TODAY
“Mortgages issued to purchase homes, rather than refinancing existing mortgages, are still humming along at an encouraging clip. Some “fence sitters” are buying now to avoid higher rates later. What’s more, the strong housing market and wage increases are encouraging many buyers to take the plunge. Even some notoriously cautious Millennials are increasingly jumping into the market. Rent increases averaging 5% might be a contributing factor for them.”
Jim Puzzanghere, Los Angeles Times
“The sudden increase has cooled the market for mortgage refinancing and is likely pushing some prospective home buyers to rethink how much house they can afford.
When mortgage rates are low and dropping, refinancing activity rises as homeowners look to replace higher-rate loans with cheaper ones. With rates now headed the other way, refinancing activity is expected to drop off in 2017, according to the Mortgage Bankers Association.”
“With mortgage rates going up, affordability is down. But affordability is still at a fairly high level. Even though mortgage rates go up doesn’t mean people will buy fewer homes.
To be sure, a sustained surge in borrowing costs could further hinder first-time purchases at a time when rising values are already hurting affordability and pricing out buyers in many markets.”
What are your thoughts on interest rates going up? We’d love to hear from you.