Mortgage rates are rising from near-historic lows.
Is that deterring consumers from purchasing? Or is it leading them to purchase now instead of waiting for rates to rise even more?
“All things considered, interest rates are still historically low, being under 5 percent, so many buyers are not feeling the complete rush to buy just for that reason alone,” said PAR Treasurer Chris Raad. “Many buyers want to speed up the pace of purchasing, but the inventory is holding many back with so many multiple offer situations. Many buyers are frustrated with the current inventory issues.”
“I have not noticed any panic among buyers as to interest rates to date, most of their panic is being one of three offers on a property,” said PAR President-elect Bill McFalls. “But that being said, the rates are starting to sneak up and our members should keep up to date with their lenders as to rates so that they are educating their clients correctly.”
PAR President Todd Umbenhauer agreed, noting that the lack of inventory is the biggest issue. “So far, rising interest rates do not seem to have taken the momentum out of the market. Due to a continuing lack of inventory in average-priced homes, we are still seeing multiple offers, many times shortly after a home is put on the market. The increases in interest rates have not been dramatic, so housing affordability has likewise not been impacted to a significant degree. It is important to note, however, that if interest rates continue to trend up, there will be that point where buyers find that they are no longer able to afford the type of house for which they had previously qualified,” he said.
Umbenhauer added that for that reason, for most people, the best time to buy is now.
PAR Treasurer Bill Festa said serious buyers are feeling pressured to purchase sooner. “The not-so-serious have decided to ‘wait until rates come back down.’ It sort of separates the serious buyers from the tirekickers. I haven’t had anyone not qualify anymore because of the increase, but it’s certainly a possibility for some.”