The “new normal” in the housing market that you’re referring to is the potential rise in mortgage rates to around 7%. This could mean several changes for potential homebuyers, current homeowners, and the real estate market as a whole.
1. Home Affordability: Higher interest rates make homes less affordable. Even a small increase can add hundreds of dollars to a monthly mortgage payment and tens of thousands over the life of a loan.
2. Slower Market: Higher rates could slow buyer demand, which could in turn soften the housing market. Sellers might find they need to lower their prices to attract buyers, especially in higher cost areas.
3. Refinancing: If rates go up, refinancing becomes less attractive. Many homeowners who might have considered refinancing might choose to stay with their current mortgage.
4. Renting vs. Buying: As mortgage rates increase, renting might become a more attractive option for many people, leading to an increase in demand for rental properties.
5. A Shift in Demand: Higher priced markets and more expensive homes will feel the pinch more as rates go up. That might lead to more demand for lower priced homes and markets.
However, it’s important to note that even at 7%, mortgage rates would still be relatively low compared to historical trends. And while higher rates can present challenges, they can also offer opportunities. For example, they might lead to a more balanced housing market, with less frenzied competition for homes.
Always consider your
Welcome to the housing market’s ‘new normal’ — 7% mortgage rates and all
The “new normal” in the housing market that you’re referring to is the potential rise in mortgage rates to around 7%. This could mean several changes for potential homebuyers, current homeowners, and the real estate market as a whole.
1. Home Affordability: Higher interest rates make homes less affordable. Even a small increase can add hundreds of dollars to a monthly mortgage payment and tens of thousands over the life of a loan.
2. Slower Market: Higher rates could slow buyer demand, which could in turn soften the housing market. Sellers might find they need to lower their prices to attract buyers, especially in higher cost areas.
3. Refinancing: If rates go up, refinancing becomes less attractive. Many homeowners who might have considered refinancing might choose to stay with their current mortgage.
4. Renting vs. Buying: As mortgage rates increase, renting might become a more attractive option for many people, leading to an increase in demand for rental properties.
5. A Shift in Demand: Higher priced markets and more expensive homes will feel the pinch more as rates go up. That might lead to more demand for lower priced homes and markets.
However, it’s important to note that even at 7%, mortgage rates would still be relatively low compared to historical trends. And while higher rates can present challenges, they can also offer opportunities. For example, they might lead to a more balanced housing market, with less frenzied competition for homes.
Always consider your
