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

Borrowers need to get off the sidelines and into a home

When the housing crisis hit in late 2009 and 2010, credit tightened as a natural response. Although the market has largely recovered, financing has remained difficult for borrowers with credit scores below a certain threshold.  According to the January 2017 Ellie Mae Origination Insight Report, 69% of all closed...

Warren Buffett loves HomeServices of America

The Omaha tycoon referenced more acquisitions for the brokerage firm over the next 10 years In Warren Buffett’s 2016 investor letter released this past weekend, the folksy tycoon called out HomeServices of America (HSA) and said to expect more acquisitions. The company had $225 million in earnings las...

December Housing Stats

Click below to see the individual report: Condo Report Hi-Rise Report Inventory Report Investor Report Loan Ratio Mortgage Report NOD Daily Report NOS Daily Report PID Graphs SFR Activity SFR Activity: $0-399k SFR Activity: $400k-749k SFR Activity: $750k+ SFR Appreciation SFR Appreciation: $0-399k SFR A...

September 2017 Residential Resale and Foreclosure Report

Single family median prices reached a new high of $265,000 in Southern Nevada during September 2017. The latest price point reflects annual appreciation of 13.5 percent. Single family closings totaled 2,920 during the month, which was flat with last year, and effective availability stood at 1.9 months (down 27.0 perce...

Veterans: Move Into Your Vegas Dream !

Veterans, are you tired of finding the perfect home, only to make an offer and get beat out by a cash buyer? Don't give up hope! You can still move into the Las Vegas home of your dreams this summer courtesy of a new home builder that supports our troops. For the rest of the month of June, Richmond American Homes of L...

Leave a Comment

Have a Question?

Contact Us

Follow Us