Since the beginning of 2018 we have seen an uptick in interest rates which is increasing costs for buyers, in an already tight inventory market. Freddie Mac indicated on April 26, 2018 that the average rate on a 30-year fixed rate mortgage jumped to 4.58%, as compared to 4.03% a year ago. The average rate on a 15-year fixed rate mortgage went to 4.02%, an increase from 3.94% the week prior.
According to Realtor.com, these increases have made the average monthly mortgage payment increase nearly 13% over the past year, or about $168 per month.
What’s interesting to note, is that it seems that sensitivity to these rate fluctuations varies by generation. Millennials came on scene when interest rates were at historic lows, so a small increase might seem significant. While other generations may recall the days when rates were as high as 18.45% in October 1981, and thus may perceive even a small uptick as still being low.
So what does this mean for buyers? They are being faced with an increase in mortgage costs and fewer properties for sale. In primary home markets, some existing homeowners are renovating rather than selling to avoid a more expensive mortgage. If further loan rate increases lead to less inventory, it could push prices higher making it harder for possible buyers.
However, according to Freddie Mac’s chief economist, “Despite the increase in borrowing costs, demand…remains solid.” This seems to especially be the case here in Heber/Overgaard. There are many well qualified buyers in the marketplace with very little inventory to choose from. Historically, we see more sellers start to put their homes on the market in the Spring time so that should help ease inventory a bit.
The other good news is that The Mortgage Bankers Association reported that activity in the 1st Quarter was up 11% from a year ago despite the increased interest rate. The National Association of Realtors and Freddie Mac estimate that the median price growth will rise by 3.5% in 2018. This is good news for homeowners.
If you’ve been considering buying or selling, please contact one of our Dominion Group Properties’ Real Estate Professionals at 928.468.3232 or visit us at our Bison Ranch office in Overgaard. We’d be happy to assist you! Learn more about us at www.dgp-az.com. We at Dominion Group Properties are Your Rim Country Real Estate Professionals!
References: National Association of Realtors®, Realtor.com, freddiemac.com