Rising Interest Rates Have Not Dampened Demand

Dated: 07/12/2018

Views: 32

Rising Interest Rates Have Not Dampened Demand | Keeping Current Matters

Since the beginning of the year, mortgage interest rates have risen over a half of a percentage point (from 3.95% to 4.52%), according to Freddie Mac. Even a small rise in interest rates can greatly impact a buyer’s monthly mortgage payment.

First American recently released the results of their quarterly Real Estate Sentiment Index (RESI), in which they surveyed title and real estate agents across the country about the impact of rising rates on first-time homebuyers.

Real estate professionals around the country have not noticed a slowdown in demand for housing among young buyers; nearly 93% of all first-time homebuyers last quarter were between the ages of 21-35, with the largest share of buyers (51%) coming from those ages 26-30.

First American’s Chief Economist Mark Fleming had this to say,

“On a national level, mortgage rates would need to hit 5.6%, 1 percentage point above the current rate, before first-time homebuyers withdraw from the market.”

So, what is slowing down sales?

According to the last Existing Home Sales Report from the National Association of Realtors, sales are now down 3.0% year-over-year and have fallen for the last three months. If rising interest rates aren’t to blame, then what is?

Fleming addressed the cause, saying that:

“The housing market is facing its greatest supply shortage in 60 years of record keeping, according to the Federal Reserve Bank of Kansas City. The ongoing housing supply shortage will make it difficult for first-time buyers to find a home to buy, even when they are financially ready.”

Bottom Line

First-time homebuyers know the importance of owning their own homes and a spike in interest rates is not going to keep them from buying this year! Their biggest challenge is finding a home to buy!

Blog author image

Jasmine Broderick

My clients appreciate that I am honest and trustworthy. I promise to always be straightforward with my clients throughout the entire process. What makes me different from other agents is I actually ha....

Latest Blog Posts

Considerations With A Fixer-Upper

We’ve all watched the HGTV programs that show a run-down old house transforming into a dream home. Tackling a big renovation project on an outdated property can indeed pay off big—both

Read More

MAKE YOUR BATHROOM EASIER TO CLEAN

Bathrooms can be the most difficult places in our homes to keep clean. However, with a few clever changes and upgrades, it can be much easier to clean and maintain your bathroom.No-Touch Faucets:

Read More

Fall Gardening in Arizona

Fall Gardening in ArizonaSeptember 2018It’s Fall in Arizona, the biggest planting season!  Now is the best time to get your soil ready and plant your garden.Prepare beds for fall&

Read More

Are Homebuyers Starting to Hit the 'Pause' Button?

For the last several years, buyer demand has far exceeded the housing supply available for sale. This low supply and high demand have led to home prices appreciating by an average of 6.2% annually

Read More