Is the new threat for home buyers and sellers the end of historically low interest rates?
As written recently in The Washington Post, the era of rock-bottom mortgage rates may be coming to an end. This means that many Americans looking to buy a home are feeling pressure to act as soon as possible. While home buyers have enjoyed interest rates of under 4 percent, far lower than historic averages, analysts say that will change if the Federal Reserve raises rates for all types of loans, particularly mortgages.
Data suggests that buyers are paying attention to the possibility of higher rates. According to the Mortgage Bankers Association, the number of mortgage applications submitted this fall was approximately 20 percent higher than a year ago.
Increased interest rates means that borrowers cannot spend as much on a home. Perhaps they wait longer to save more money for the down payment. In some cases, people considering selling to buy a larger home in the area or move closer to work and school, are reconsidering if it means higher interest rates, affecting how much home they could now afford.