How Mortgage Rates Affect the Housing Market

Posted by Admirals Cove Homes on Jul 10, 2013 in Home, Real Estate | 0 comments

The number of people trying to buy for a home keeps increasing every month due to two huge factors. First, home costs are still comparatively cheap, and second, mortgage interest are still near all-time lows. But, because the demand for home ownership continues to grow, home prices and mortgage rates continue to rise.

It’s clear that interest rates have an effect on home buyers. However, they also have an effect on the sellers as well. That’s why it is important for everybody to keep an eye on what rates are doing.

On a $200,000 loan with a 30-year, fixed-rate mortgage, an interest rate increase of just 1% can add nearly $1,400 in annual costs and $42,000 over the life of the loan.

That’s why real estate experts say the time to buy is now. However, for many buyers, that is easier said than done. There are so many people that want to buy right now that the increase in buyers have led to bidding wars, with many homes selling for more than the original listing price.

As long as this continues, sellers will maintain control of the market. However, with mortgage rates on the rise, some prospective buyers are choosing to bail out and stop pursuing a home. As home prices and interest rates increase, the idea of buying a home becomes less attractive to some consumers, especially if they keep losing in bidding wars.

This is why mortgage rates are so important in the housing market. They don’t just affect the buyer trying to get the mortgage, they affect the seller as well.

For more information on home listings in Admirals Cove, contact Rob Thomson and the rest of the Admirals Cove team at (561) 743-0344 or acteam@wfpcc.com.