Higher Mortgage Rates Affecting Buyers in Major Way
As a housing recovery continues throughout the United States, certain side effects are taking their toll on first-time and other buyers. I'm speaking, of course, about mortgage rates.
Many home buyers who decided to enter the real estate market in the early part of the year were probably not expecting to see one of the largest rate hikes in 20 years happen during their housing hunt. In fact they were probably hoping to see rates stay at a record low of 3.31 percent like they were in November.
Unfortunately, rates increased to the current average or 4.51 percent for a 30-year fixed loan. This is hugely affecting some buyers, who would otherwise jump at a great home, when the monthly payments on a $400,000 mortgage increase by an extra $275 per month.
Ultimately, what this means to the future US housing market is a decrease in transactions because fewer buyers can qualify for loans. Interestingly, the US has seen an increase in second quarter sales volume by quite a bit. This leads to the belief that buyers are jumping at the current rates and housing supply before the possibility of another increase. Also, cash buyers are becoming more powerful and increasing in numbers in the current climate, which made up for 40 percent of sales last quarter.
How have these increased mortgage rates affected you? Are you seeing similar trends, as buyers less frequently qualify for loans, in your area? Tell us your thoughts, perspectives, or ideas in the comment section below.
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