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What’s UP with Interest Rates??? A recent article published by Realtor.com states that a year ago, rates were about 3 percentage points less, at 3.12%, taking some of the sting out of higher home prices. About 18 million households, or 15% of all households, who could have qualified for a mortgage at the beginning of this year can no longer do so because of the higher rates. Others are choosing less expensive homes or postponing their searches. The latter is particularly bitter for many first-time buyers, who are also contending with fast-rising rental prices. For buyers who are financing homes, a lot of them are taking a step back at this time. Despite the rate increases, home prices aren’t expected to fall. In fact, price growth might even stay strong, at least initially, as buyers hurry to lock in purchases before rates rise even more. In addition, the number of homes for sale is still somewhat short of what’s needed to meet demand, however it is improving. This trend has enabled existing home sales to compete with new home sales in the Enid area. What happens with mortgage rates will depend on how quickly the Fed gets inflation under control or if it needs to keep wrangling it by increasing interest rates. Historically interest rates have climbed to double digits. Currently, they remain in the single digits which is still considered relatively low. In the meantime, homebuyers will anxiously see how this plays out.
Several new reports from real estate companies suggest buyers may be starting to get a break in this red-hot housing market. More listings are coming up for sale, and some sellers are lowering their asking prices. "Increases in interest rates typically tend to slow down the escalations in the market. The latest increases were in anticipation of the U.S. Federal Reserve raising its own short-term interest rates in its quest to tame inflation. This hike is the highest increase since 1994. While mortgage rates are distinct from the Fed’s short-term interest rates, they typically follow the same trajectory. So, when the Fed’s rates jump, so do mortgage rates. How high mortgage rates go depends on how high the Fed ultimately needs to raise its rates to fight inflation,” said Chief Economist Danielle Hale of Realtor.com. However, she believes mortgage rates could retreat a little once the smoke from the Fed’s announcement clears. “We’ve seen big jumps in rates before. Rates change quickly.” 28 | AUGUST 2022 | ENID MONTHLY
