The Atlantic reports that mortgage interest rates will rise. But as with all volatile markets, no one knows the exact interest rate increase until the market corrects and the economists are just looking back.
Many Americans find mortgage their biggest debt alongside student loans, and the most important one once they reach adulthood. Here at Altius Mortgage Group, we aim to help you decide on your home buying pursuits, however the mortgage weather fares.
Inverse Proportions on Mortgage Interest and Home Price
If those who already incurred mortgage fear the rise, those who haven’t and are looking into getting a property would be thrilled to hear this. Apparently, some observe that rising mortgage interest rates affect housing prices inversely.
Housing market experts explain one way this is true. Some property sellers find it more difficult to sell once the mortgage rates are declared on the rise. To entice home buyers despite the mortgage scare, they lower property value. With the market seemingly more penetrable, the sellers get their chances to dispose their properties in the midst of the crisis while the buyers take advantage of the low down payment.
Is This a Good Thing?
In one perspective, it could be a good thing to buy a house at a more affordable price even with higher interest rates. On a closer look, the panic only makes more losses to the seller and possibly to the buyer in the long run, but this is just hypothetical and ideal.
In reality, potential property buyers who are intimidated by the mortgage increase will try to steer away from the market until it returns to equilibrium and home prices are back to its real value. Sellers will also try to hold on to their properties a little longer until such a time their values get back to safe marketing levels, that is, when they can get a higher return after waiting for the spell to end.
The truth is, there is no saying whether the housing market reduces or increases their price in tune with the mortgage interest rates. The overall economy, changing demographics, and laws all decide what happens to the housing valuation at a given period in a specific location. Until then, you can only prepare your response.
Choose a reliable mortgage consultant to help you achieve your goals to have your dream home. If you want to learn more about mortgage loans and apply for one, contact us.