Interest Rates on the Rise - What does it mean for buyers?
Inflation concerns have sparked the Fed to raise its interest rates. As a result, we have seen 30-year mortgage rates go up significantly in just in the past week.
Concrete increases and the threat of further increases looming has buyers worried and lenders sounding the alarm to get pre-approved ASAP.
To learn more about what these upward-trending rates mean for homebuyers and especially those we work with, we sat down with Lee Poole, a real estate broker at Rich Realty Group in Raleigh, NC and a mortgage lender at Monarch Mortgage, to discuss his knowledge of the situation as someone on both sides of the transaction.
"Rates are going up pretty quickly," says Mr. Poole in the wake of recent news and action taken by lenders. "We could see a sustained rate increase through mid-March when the Fed meets next. I believe [the Fed] may raise the rates at least three times this year, if not four." Other reports forecast an even bigger increase over 2022, indicating that the Fed plans to raise its rates as many as seven times this year.
Projected rates on the rise can mean many things for an expanding buyer pool - so here's what homebuyers need to know in this new interest rate climate.
According to Mr. Poole, the number one thing buyers need to be aware of is maintaining the rate for which they qualified. "The rate you qualified for - double check you still qualify for it today, because you may not qualify at that rate for that price with the current rates."
In this competitive Raleigh housing market, it is not unusual to see a home go for well above its asking price. Borrowers should be careful with dynamic interest rates that they can still afford the cost of a bid over ask. "Make sure you're qualified for above asking price offers you're submitting," says Poole.
Another thing that comes into play with higher prices is the appraisal. Mr. Poole's advice: "be careful if the property doesn't appraise because you'll need cash to make up the difference; your offer may also require mortgage insurance."
While the goal of increasing rates to lower inflation, the Fed is hoping to make it more difficult for buyers to make rapid purchases that continue the upward trend of sale prices for residential homes. At Rich Realty Group, we're seeing sustained demand in spite of these increasing rates due to low inventory. If inventory in Raleigh and the rest of the areas in the Triangle goes up at all, we would expect to see the influence of higher interest rates take its intended effect - but you never know!
If you have questions about buying or selling your home in a turbulent market, reach out to a team with experience and contact Rich Realty Group today. We also recommend finding a qualified lender who can help you along your home buying journey.
It's a great day to buy real estate!