Since the presidential election, interest rates have gone up. And that has impacted home buyers at Russ Lyon Sotheby’s. Some are still home shopping due to fear of rates going up even higher in December. Others have dropped out of the market.
Rates on a 30-year fixed loan are the highest in more than a year, climbing up to 4.125 percent from 3.5 percent in just a week.
For those Russ Lyon Sotheby’s clients with a financial cushion, the higher monthly payment is an inconvenience. For those buyers who can barely afford home ownership, higher mortgage rates are pricing some out of a home.
Keep in mind, mortgage rates are still historically low, but this latest increase means monthly house payments are going up more than $50-per-month for a Russ Lyon Sotheby’s home. As a result, some buyers won’t qualify for lenders debt-to-income ratio that’s now required. It also means buyers are a little more apprehensive about diving into home ownership.
Since rates are expected to continue to climb, the best advice when looking for a Russ Lyon Sotheby’s home is to stay “off the edge of affordability.” Mortgage lenders can’t lock in a rate without a signed contract. In this time, there’s always the possibility of rates going up again. If you’re making an offer on a home you can barely afford, you might get priced out of it if there’s another rate hike.
If the Federal Reserve raises its lending rate in December, mortgage rates don’t follow — at least not exactly. Instead loan rates loosely follow the yield of the U.S. 10-year Treasury bond. And as investors sell out of the bond market and dive into the U.S. stock market, that yield has been moving higher.
Sellers at Russ Lyon Sotheby’s, though, don’t seem moved by higher mortgage rates since the demand is so high.
Even though December is typically a slow month for home buying, you might not want to wait until spring since interest rates are expected to go up again before the end-of-the-year.