As interests rates surge, it’s getting more and more expensive to purchase a home.
Following in the wake of interest rates hiked by the Federal Reserve last month, mortgage rates remain unpredictable and have consistently been on the rise since the start of the year. If you are looking to purchase a home now, trying to time the market may not play much in your favor.
We spoke with GreenState Credit Union’s Chief Mortgage Officer Ryan Doehrmann, who said it’s tough times for the housing market.
“It’s hard to get people to try and list in their current environment and I can’t express that enough. Tough times don’t last, tough people do and tough companies do, and I think we’re just in that tough little area right now.”
He said housing payments have jumped and are causing a decrease in mortgage applications.
“If you just take a $200,000 home loan right now and at the start of the year rates were at about 3.25%, your interest payments were around $870. Fast forward to today at 6.5%, same loan amount, those payments are $1,264. That’s a difference of almost $394 a month for the same house and the same loan.”
“We were closing around 1,000 loans a month all of last year, and the first half of this year but that has fallen off drastically so we’ll be half of that this month and next.”
As mortgage rate increase, this could also be impacting the rental market.
“If there’s more people being pushed out of the home buying process right now and they have to rent and if we don’t have enough apartments and enough places to rent, unfortunately those landlords can charge what they need on their rent. People are just getting ready for the future and if there’s something they need to clean up on their credit report they’re doing that and taking advice and just kind of writing down all of the options they have right now.”
Doehrmann says he doesn’t see these interest rate increasing forever, but says the market should level out by the end of the year and taper off by the first or second quarter of 2023.