The world's largest real estate franchise by agent count
Rising mortgage rates is, in my opinion, the #1 contributor to the
slowdown we’ve seen over the past several months. As you can see in the
graph below, the federal reserve
has never raised interest rates this quickly. They want to tame inflation and keep it below
their 2% target rate, but they should have been raising rates earlier and
slower starting over a year ago. This rapid rate rise is shocking our
economy and real estate market and the sooner they stop making these increases
the sooner things will stabilize.
method for home buyers to counter rising mortgage rates is to use an Adjustable Rate Mortgage (ARM). These were common years ago but the very low
mortgage rates we’ve experienced for over 10 years (until this year) made them
unnecessary. For example, a buyer using a 3/1 ARM would have a lower
interest rate/mortgage payment fixed for the 1st 3 years and then it would
adjust to the current rates at the end of the 3rd year. The buyer could
refinance if rates have dropped at that time. Talk with your lender to see if
this works for your situation.