Despite rising rates, we’re not seeing the market slow down.
Will rising mortgage rates cool off a hot housing market? In the past few weeks, we saw the Federal Reserve aggressively increase interest rates by over 1%. The rate at which they went up was faster than we expected, especially in Q1.
The federal government is raising rates to help curb inflation. However, there isn’t any evidence, so far, to show that it’s making anything change or slow down. Because low inventory has kept our market moving at such a rapid pace, we haven’t seen interest rates curb except for first-time homebuyers entering the market. While homeowners have large equity positions and the ability to use their funds to buy up or down, first-time buyers do not. They’re trying to enter this crazy market with limited funds.
We saw a 30% drop in mortgage applications due to interest rates rising. This is also affecting second home purchasers. Those interest rates have increased dramatically, and the lending standards have become much tougher. We’re consistently seeing first-time homebuyers and people trying to buy second homes being priced out of the market but we haven’t seen demand slow.
We are at the height of the selling season and many are projecting that once we get past it, things could look very different. My team and I are tracking the data week by week so if you’re curious about your specific circumstances, please don’t hesitate to reach out to us by phone or email. We will help you strategize. We look forward to hearing from you.