Monday, May 9, 2022 / by Brad Brethouwer
Here’s a quick look at how rising rates affect the housing market.
As I’m sure you’ve heard by now, the Federal Reserve announced this year that they would raise interest rates throughout 2022. How is this going to impact the real estate market? Today I’ll discuss the changes we’ve seen so far and what we can expect from the year to come.
Mortgage rates are currently at about 5.55%, depending on your location, down payment, credit score, and other factors. The Fed has been increasing rates throughout the year to slow down the market and combat inflation. The market has slowed in some respects, but overall, it’s still going crazy. For example, homes between $300,000 and $350,000 are still selling quickly, but sales for homes above $400,000 have slowed down in some areas.
"If rates keep rising, sellers may have to start reducing their asking prices."
Just a year ago, mortgage rates were around 3.1%. The jump up to 5.55% this year has impacted how much buyers can afford. After all, a rate increase of just 1% can decrease buying power by 10%. As rates continue, buyers will only lose purchasing power, and sellers may have to start reducing their asking prices.
If you have questions about how rising interest rates will affect your specific circumstances or anything else to do with the market, give me a call or send me an email. I’d love to speak with you.