Rising mortgage rates could have a big impact on the direction buyers go when shopping for real estate, local lenders warn.
Every time the interest rates go up, you eliminate a group of people who can no longer afford to buy a house in Jacksonville. For those with existing loan pre-approvals, they may be able to move forward but with a smaller budget.
To avoid further complications to their plans, those planning to buy in 2018 may want to speed up their home search this Spring, as interest rates are forecast to move higher in the coming months.
Forty-four percent of home buyers say rate increases will likely force them to settle for a smaller, less expensive home that requires a longer commute to their jobs, according to a realtor.com survey; and first-time buyers may be most affected by rising costs as increasing home prices and interest rates price some out of the market.
Mortgage rates are at their highest levels in more than four years. The 30-year fixed-rate mortgage averaged 4.46 percent last week, according to Freddie Mac, and that’s largely expected to increase since the Federal Reserve said it’s likely to raise its short-term interest rates this year. That could prompt mortgage rates to move higher at least three times this year, starting this month.
“For the bulk of buyers, it’s not going to kill their decision to purchase a home. “If anything, it will get them off the fence by creating a sense of urgency.” Higher rates are “a kick in the pants for you to start thinking seriously about buying.
Rate increases – even minor ones – can add up over time. Realtor.com offers this example: On a $300,000 house with a 30-year fixed-rate mortgage and 20 percent downpayment, the difference between a 4 percent and 5 percent mortgage rate is $142 a month. Calculated over the life of the loan, that is more than an extra $51,000.
Data source: Realtor.com
Allison Rodrigues is the owner and broker of Bold City Real Estate. She is passionate about her hometown of Jacksonville, Florida but helps both buyers and sellers in most areas of Northeast Florida. Her background in real estate law made the transition to selling homes an easy one and she prides herself on being available, adaptable, and transparent with her clients. She can be reached at 904-210-8387 or by email at Allison@BoldCityLife.com.