Experts believe that in 2019 the data indicators show that interest rates on mortgage loans will continue to rise. The interest rates steadily rose from mid-2018 until recently and experts believe that they will continue to rise. When the interest rates increase on mortgage loans it can dramatically affect the market for both people looking to buy a home and people looking to sell a home. If you are considering doing either in the near future you should find out what the high-interest rates can affect your experience.
Home Buyers
Potential home buyers may notice that with rising interest rates come higher mortgage payments. When interest rates increase potential home buyers often get preapproved for a lower amount than they would if the interest rates were lower. This is because the interest rate will increase the monthly payment amount. For example, a buyer may have been preapproved for a home for 200,000 dollars when the interest rates were around 3% and today when the interest rates are around 5% or more the same buyer may only be preapproved for a home that is 175,000 dollars.
When the amount of home a potential home buyer can afford drops they have fewer potential homes for sale that they can see. This can make the market hot in lower-priced homes, but dramatically reduce the amount of interest in higher priced homes. With more people looking at lower-priced homes, potential homebuyers may find a lot of competition in the houses they are looking at. The supply of these homes is typically limited and the demand for these homes increases. Home buyers will likely have to make competitive offers and limit the contingencies they place on their offers.
Home Sellers
People looking to sell a home when the interest rate is high may find that they need to lower the listing price of their home in order to attract a larger number of buyers. Listing a home for sale too high can eliminate a large number of potential home buyers who are not pre-approved for a high amount. When interest rates on mortgage loans are high, home buyers often find themselves having to list their home for less than they wanted to in order to get an offer.
If you are interested in selling your home you should consult a financial counselor or a Realtor to determine the best time to sell your home and to make the largest profit from it. They may recommend that you list your home before interest rates spike even higher or they may recommend that you wait to sell your home to see what the market does. If you are planning to sell your home in the near future you need to consider interest rates, but more importantly, you need to consider the homes that are already on the market and if there is room for more competition.
Strong Economy
While interest rates on mortgage loans are rising and affecting the real estate market dramatically there is some good news. Interest rates rise when the economy is strong. The lower the unemployment rates and the stronger the economy, the higher the interest rates will go. Therefore, even if you may be paying a little more on your monthly payment or getting a lower asking price when you are selling your home, you can rest easy knowing that the real estate market may actually get stronger since more people are working and saving up to afford a home.
Interest rates can affect the market drastically, but when interest rates rise there are more people looking to buy. Whether people are looking to save up more money for a down payment before they purchase a home to reduce their monthly payment or they are going to buy a home for less there will always be people looking to buy homes. Pricing your home right, finding the best Realtor to list your home, and listing your home when the supply is low can help you get the most for your home regardless of how the market goes.