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.
One 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.
(512) 853-0110 or robert@AustinTxHomeSales.com
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