Get free access to our world class MLS search tools, save your favorite listings, create saved searches & much more!

Will rising interest rates stifle homebuying in 2017 ?

Posted by Mastura Zaini-Roberts on Friday, February 24th, 2017 at 12:39pm.

The majority of prospective homebuyers are worried about low inventory and rising interest rates impacting their ability to purchase a home, according to new data from Zillow. 

Mortgage rates increased last year following the presidential election and December’s federal funds rate hike. With more hikes expected on the horizon, rising rates may stifle homebuying ability, Zillow said.

Low inventory is still homebuyers’ number-one concern, with 65% saying they worried about their ability to find an affordable home. However, rising interest rates were in second place, with 53% concerned that interest rates could prevent them from buying. When Zillow conducted the same survey in 2015, interest rates ranked behind worries about both finding an affordable home and saving for a down payment.

It’s not all bad news, however. According to Zillow, plans to purchase won’t be immediately impacted by rate hikes. Eighty-three percent of people planning to buy a home in the next three years said they’d go ahead with their plans even if rate rises increased their monthly payment by $100. And 49% said they’d still purchase a home even if rate hikes upped their payments by $200 per month.

However, as rate hikes continue to increase monthly payments, buyers will start to shy away. A quarter of prospective homebuyers said they would reconsider the type of home they were looking for if their monthly payment were to increase by $100. Another 38% would revise their homebuying budget if rates were to rise by $200.

“For years, falling interest rates have been a boon to the US housing market, keeping monthly mortgage payments low for first-time and move-up buyers alike, even as home values rose,” said Erin Lantz, Zillow Group’s vice president of mortgages. “As rates rise this year, first-time homebuyers and those looking to buy in expensive markets where affordability is already an issue will feel the pinch of higher rates on their budget. That said, for most borrowers, there is quite a bit of head room for rates to rise before homebuying becomes unaffordable.”

In the event of a mortgage-rate hike, the hardest-hit buyers will be those living in already-expensive markets. In pricey markets like San Francisco or San Jose, a rate hike to 5% could mean increases of$400 or more in monthly payments, Zillow said.

 

by Ryan Smith
http://www.mpamag.com/news/will-rising-interest-rates-stifle-homebuying-60948.aspx

 

Mastura Roberts
(702) 919-5400
offers@greatlasvegashomes.com

Team Leader, The Tonnesen Team
Berkshire Hathaway HomeServices, Nevada
3185 St Rose Pkwy #100 Henderson, NV 89052

With over 30 years of experience helping families call Las Vegas "home!"



Related Blog Posts

Expect the ‘longest economic expansion’ since WWII, says economist

Don't hold your breath for a recession anytime soon, says Cushman & Wakefield's global chief economist BYAMBER TAUFEN Staff WriterJUN 15  Key Takeaways Kevin Thorpe, global chief economist at Cushman & Wakefield, thinks there's little cause to worry about a recession in the next couple of ye...

New Las Vegas Luxury Condo Project Taking Reservations!

If you have been looking for a taste of luxury, hurry down to view the new models at The Modern, which should be completed by the end of January! The Las Vegas real estate market is coming to life again with The Modern, the first new Las Vegas luxury condo project to open during the past few years, was developed as a t...

In the Words of Frank Sinatra...

The Tonnesen Team of GreatLasVegasHomes.com would like to take this opportunity to wish everyone a heartfelt "Happy Thanksgiving," and may your homes be blessed with joy. The following is something written by our wonderful Team Manager, Patty Annis, that describes how she feels about this holiday season and being home...

Home prices set record for 5th straight month

Home price data for April shows another record high, the fifth consecutive month of new peaks. The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index which covers all 9 US census areas hit its highest reading (188.50), rising 5.5% from a year earlier, but easing from the 5.6% gain for March.The 10-C...

The "Magic" of Christmas Visits Las Vegas

The Magical Forest has become a cherished Las Vegas Christmas tradition. Originally it began as a small wine and cheese party that drew in passersby with its lovely Christmas lights, causing them to stop on their journey through the city and ask for a moment’s admittance. But the Magical Forest of today is a far cry...

Leave a Comment

Have a Question?

Contact Us

Follow Us