Mortgage Rates on the Rise

The real estate market has been volatile over the past few years. Home loan interest rates reached record-breaking lows.  Many homes sales occurred but new listings weren't keeping up with home buyer demands. It was the perfect storm of chaos. Things are begging to settle down and here are the changes you can expect to see in the market.

Mortgage rates are on the rise. We saw this trend begin late in 2021. You might be wondering why this is happening.  Here's a brief explanation.

Mortgage rates increase for several reasons. The strength of the economy is the primary reason. More people are employed now since the start of the pandemic. The economy is recovering and that’s a good thing.

Inflation is another concern. When costs go up, the Federal Reserve limits the amount of money flowing into the economy.  They also increase costs to the bank, which makes it more expensive to borrow money. That expense is passed to consumers through higher interest rates. It’s a complicated process easily affected by many more factors. What we know today is that interest rates are on the upswing.

But what does that mean for you as a home seller or a home buyer? Let’s take a closer look at both sides of the real estate transaction.

If you’re a seller, what should you be aware of?

It’s still a seller’s market even with rising interest rates. There is still a housing shortage and that is very impactful on the market. It’s a great time to sell for this fact alone. With fewer homes available in the market, there is less competition for your home. Homes are selling very quickly. Many homes under contract are receiving offers within two weeks or less. The condition of the home is very important. The better the condition, the quicker the offer.

But, as interest rates rise, financing for some buyers may be challenging. Some deals may fall through if financing isn’t secured. With plenty of buyers, sellers may find another buyer quickly. Also, consider negotiating with the buyer to complete the sale. You may need to reevaluate your asking price as well.

Overall, it’s an excellent time to list your home. Be prepared to negotiate if needed.

If you’re the buyer, what do you need to know?

The housing shortage continues to make the market competitive. Some buyers may be reluctant to list their homes now. They may be concerned about financing their next property. Expect home prices to drop, this is already happening in some markets. This could work favorably for you to buy your dream home.

Although home prices may become affordable, financing your dream home may be challenging. Expect to see interest rates continue to rise throughout the year. If you are planning to buy, this is the time to make that move.

Overall, it’s an excellent time to buy your next home. Be prepared to see rising interest rates continue.

Remember to reach out to us if you have any questions. We’re here to help you with your real estate transaction needs.