Rising Mortgage Rates Not Stopping Homebuyers
Buyers and homeowners who are refinancing have benefited over the past 18 months from historically low rates for a 30-year mortgage. But that has changed recently: mortgage rates are back, hovering around their spring 2020 return level.
If the Federal Reserve raises interest rates soon – as it announced – it could also push up mortgage rates. Buyers receive this signal. Even if rates go up, mortgage applications are on the rise.
In September, Dustin and Erica Goldman found a home they loved in Brooklyn with enough room for their home office and toddler. So they made an offer. But it took forever to close and their low mortgage rate was in danger of expiring.
“The day we heard they extended it was the day the Fed got together and said they were definitely going to raise rates in the new year. Like, ‘Oh, phew!’ Said Dustin Goldman.
His wife Erica said they moved into their three-bedroom unit on Friday, having closed four days earlier. “And we’re just in love with it. And there’s so much unboxing to do! she said.
Sometimes when interest rates rise, buyers back off, hoping that rates will drop again and they’ll get a better deal. But some brokers say that’s a different story right now.
“Recently, rates, they’ve been steadily going up for the last 12 days, if you look at it,” said Tiffany Bogerty, a Florida mortgage broker. She said some buyers are telling her they want to cut their loans now before rates rise further.
David Waller needed to find a home fast after moving his family of five to Mandeville, Louisiana.
“We wanted to shut it down as quickly as possible,” Waller said. This will happen at the end of the month. “We thought rates might start to come back up.”
For existing homeowners looking to refinance their mortgage, the math is currently different.
“The rate hike affected a lot of transactions because it was so extreme,” said Eric Bergeron, a loan officer in California who has a lot of clients who want to refinance a 30-year loan. “I give them a quote, you know, six weeks ago at 2.7. Now they’re ready to go but, you know, now it’s 3.3!
They could pull out of the refinancing, Bergeron said. For customers who already have a home, the stakes are lower than for those trying to buy one for the first time.