Mortgage rates causing hesitations in first-time homebuyers

By Kelly Leighton | Jan. 30, 2017 | 2 min. read

The rising of mortgage rates at the end of 2016 is causing some would-be first-time homebuyers a little hesitation in house hunting this spring.

In October 2016, 55 percent of potential homebuyers were planning to make their first home purchase in the spring. This number has dropped to 44 percent this month, according to®. The website reported that the average 30-year conforming rate rose .8 percent from September to December 2016, and would cost, on average, an extra $720 per year in interest.

“Last fall, we saw a large jump in the number of first timers planning home purchases, which was very encouraging because their market share is still well below pre-recession levels,” said Jonathan Smoke, chief economist for®. “But, as evidenced by their decline in share, first-time buyers are really dependent on financing and affordability is one of their largest barriers to home ownership. This number could continue to decline with anticipated increases in interest rates and home prices.”

While first-time buyers accounted for nearly one-third of buyers in November 2016, first-time buyers were almost five times more likely than repeat buyers to report that they struggled to qualify for a mortgage.

In addition to mortgage rates, the continued lack of inventory on the market is impacting would-be first-time homeowners. Inventory on® in December 2016 was down 11 percent from December 2015. Another aspect of the low amount of inventory is that the cost of homes is still above average. In December 2016, homes on the market cost 9 percent more than they did in 2015.® also reported that the average listing views saw an increase of 40 to 80 percent during the last few weeks in December 2016, compared to December 2015, as more buyers are striving to purchase the same homes.


Looking for events?

Pennsylvania Realtors® can access monthly webinars and much more.

Upcoming Events

Did you like this post?

Click on a star to rate this post!

Average rating 0 / 5. Vote count: 0

No votes so far! Be the first to rate this post.

Related Articles

Not a Realtor®? Learn how to become a member.