Written by: My Housing Resources Staff Writer
This article will go over the basics of the housing economy and give you insight into mortgages and loans. Keep reading to learn more so you can find better opportunities on the housing market.
In general, rising interest rates make buying or selling a home more difficult, and lowering interest rates make it easier. So when mortgage interest rates increase, their affordability decrease. Qualifying for a loan is a key step in the home buying process, so timing is everything when getting your finances together for the housing market.
Rising mortgage rates are going to make it more difficult for the seller to find a suitable buyer. Potential buyers are going to take into account the increase in the interest rate and eliminate many potential buyers.
The seller is going to want to play the market wisely, and not ask for a price that is too high in a market with inflation. Therefore, the seller needs to consider coming down in total asking price in order to make up for the increase in mortgage interest rates.
When interest rates increase, mortgages become more expensive, causing a decrease in demand in the housing market. This almost always leads to sellers coming down in their asking price. So buyer’s end up having an advantage in this situation.
Rising interest rates are always good news for the banks. The higher the interest rates, the more revenue the lenders/banks bring in. But there’s a delicate balance between rising interest rates and demand from buyers. If the interest rates get too high, the demand for mortgages decreases, hurting their revenues.
The good news for home buyers is that even though interest rates are rising, they’re still at near historic lows. This means that even though buyers will need to go into debt in order to get their new home, the level of debt is at relatively low levels compared to other times in history.
Now that we have gone over how interest rates affect both home buyers and sellers, it’s time to put in the work. Finding a good financial advisor is key to securing your future. Put yourself in a solid financial position to make that move into a new house.