Potential homebuyers reconsider making a purchase as interest rates soar
Mortgage rates have soared to their highest level in 21 years, pushing some potential homebuyers, especially first-time ones, to reconsider buying a house.
U.S. mortgage rates surged this week to an average 7.09% for 30-year fixed rate mortgages. Rates are up from 5.13% a year ago.
Inflation is to blame for the high rates. The Federal Reserve has aggressively hiked interest rates to slow the economy in hopes of slashing inflation.
"Our numbers are down year to date, number of closed sales down year to date by double digits in every single county within the Hudson Gateway jurisdiction," says Tony D'Anzica, president of Hudson Gateway Association of Realtors. He says while sales are down, it has not necessarily cooled demand for homes in a market that desperately lacks inventory.
"We have buyers out there who are looking, struggling, they are facing higher interest rates, higher sales prices and lower inventory. It's a tough market for buyers," he adds.
D'Anzica says he does not foresee mortgage rates going down anytime soon. He also has some advice to buyers.
"I would basically recommend that buyers adjust their expectation and look at it a little differently," D'Anzica says.
He says homebuyers should work on improving their credit scores to get a better rate and, if possible, put down a bigger down payment.
"There are also programs out there for first-time homebuyers that can help you with a lower down payment requirement. It can even help pay closing costs," D'Anzica says.
He also recommends working with an experienced realtor who can help buyers get the best deal.