Interest Rates and Selling Strategies Have Changed
A loan is a pretty straightforward concept: A purchaser is vetted by a bank to borrow money, the bank lends a buyer money, and the buyer repays the bank the amount that they borrowed. Interest ( and sometimes fees) that a lender charges will impact the monthly financing charges for a buyer. In this market with rising interest rates, the finance charge, or the dollar amount that the loan will cost a buyer, is increasing.
The 30-year fixed-rate mortgage, the most popular home loan product, hit 5% for the first time in more than a decade according to Freddie Mac.
See Chart here for the Monthly Average Commitment Rate And Points On 30-Year Fixed-Rate Mortgages Since 1971.
* Source: https://www.freddiemac.com/
What does this mean for buyers?
Even as higher rates slow demand, it can take months for sellers to cut prices as their homes linger on the market. Given the pressures of rising rates, buyers should secure a home now to counteract the rental frenzy in the city. Buyer’s can always refinance when rates drop in the future, but for now, rental prices are at an all time high.
What does this mean for sellers?
As interest rates April 2022 teeter over 5%, we are reminded of 2008’s recessionary actions. The Catalyst team predicts a slow down in the buying activity this Fall. Seller’s should test the market’s endurance and list their home this spring while inventory is still low, buyer demand is high, and rates are motivating transactions to occur.
What does this mean for investors?
Well, investors with a property to sublet or rent are the happiest they have ever been! * The city is thriving, but many who scored a deal now face rent-renewal sticker shock. Rents rose 33 percent between January of 2021 and January this year
If you’re considering a move, or would like to strategize turning your home into an investment property, contact the Catalyst Team.
Sources:https://gsmr.org/
