High Interest Rates Make Home Buying a Challenge by Kerry Andersen
The post hurricane housing market in Southwest Louisiana may be facing some unique and even unprecedented challenges, but no city is exempt from the topsy turvy reality of today’s fluctuating interest rates. After a year of relatively stable (and low) rates, the cost of buying a home is going up – and fast. Over the past 52 weeks, a 30-year fixed mortgage rate averaged 3.6 percent, but those days are behind us. In May, that number climbed to an astonishing 5.7 percent (5.4 percent average) and experts now believe it will rise even higher. The last time rates reached anywhere near this level was 2009 when the economy was grappling with a global financial crisis.
Lisa M. Johnson,
SVP Director of Mortgage Lending at JD Bank in Lake Charles, says inflation is the driving force behind the higher rates. “The government is raising rates to drive down inflation. This will be our reality for some time, at least until the next presidential election.” So how does an unknown and unpredictable lending market impact the home buying process? Johnson adds, “It’s more important than ever for homebuyers to turn to trusted professionals to help them through the lending process.
It’s not easy, but we are focused on counseling our clients during this unprecedented time and providing the best customer service available to those who depend on our knowledge of the volatile market with tight inventory and rising rates.” Buyers are scrambling to lock in a home loan before rates rise so high that their purchasing power takes a hit and they’re not able to afford mortgage payments. At the same time, national home prices hit an all-time high in March – up 15-percent from last year – and capping off a decade of increases for the longest running price hike streak ever. In Southwest Louisiana where available housing inventory is already low because of hurricane damaged properties, rising rates will tighten the squeeze on the demand for affordable entry level homes even more. “Eventually high mortgage rates will slow down home prices, but it’s definitely a seller’s market right now,” Johnson says. “Even so, we’re seeing more buyers trying to negotiate sale price on a home or bargain for paid concessions, so they aren’t priced out of the available inventory.” Across the country, homes are still selling for above asking price. However, economists predict that by the end of the summer there will be less competition for active listings and more available inventory. That doesn’t mean prices will dip because demand for housing is still strong, but it does mean prospective buyers won’t need to hurry and lock down a rate, easing the stress somewhat for those looking for their dream home.
LARA JAMES 794-9718
NMLS# 109493
CRAIG BOUDREAUX 661-1741 NMLS# 115723
LISA JOHNSON 526-4477
NMLS# 109517
KRISTI LYONS 476-7582
NMLS# 1434023
thriveswla.com
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