There has been a constant hike in mortgage interest rates in the recent years.
This begs the question, “Will interest rates continue to rise for home buyers?”
The answer will most likely be yes. This rising trend in mortgage interest rates may just carry on this year or even perhaps in the years to come.
Another question which you may be asking if you are a new home buyer shopping for a home loan from creditors is whether or not this continuous rise of mortgage interest rates should worry you and affect your budget plans and allocation for your impending home buying.
This article will discuss more this continuous rise of mortgage interest rates, why this fact is not as alarming as you might think it is and how you can even gain benefits from this continuous mortgage interest rates hike, and of course, the downside that comes with it.
So, Will Interest Rates Continue to Rise for Home Buyers?
Yes, it steadily will but more slowly.
Although this will be the case, this trend will not necessarily be very adverse and unfavorable. After all, in general, increasing interest rates suggest and indicate a currently stronger economy wherein more people are employed and are getting more income.
On the other hand, when the economy is slumped down, home loan interest rates tend to be lower and the lenders are even more lenient in the residential real estate business so that they can make it easier for homebuyers to borrow and spend. This then will help recover and bring back up the general economic state and conditions.
The Continuous Rise of Mortgage Interest Rates Affecting You as a Homebuyer: Should You Be Worried?
The continuous rise of mortgage interest rates affecting you as a homebuyer will not necessarily put you in the losing end.
It may just be the other way around for you. While higher interest rates will mean higher home loan monthly amortization or repayments, these will also mean less competition amongst the consumers or the market base over residential real estate properties and in turn, will result in lowering of house pricing.
The reason for this is because lower interest rates tend to encourage homebuyers to shop around, borrow and spend money to buy a house taking advantage of the low interest terms and rates. This will mean less monthly repayments for homeowners. However, with more consumers trying to acquire a residential property, creditors will lean on increasing on the house prices due to the higher demand from the real estate market.
On the other hand, with higher interest rates, interested and qualified homebuyers tend to hesitate over proceeding with home buying which then leads to creditors making a move to decrease on the house prices so as to attract more potential homebuyers to make the business swing upwards again.
The Continuous Rise of Mortgage Interest Rates Affecting You as a Home Buyer: The Downside
While the projection will generally be that the competition amongst real estate consumers will be less so that house pricing may tend to be lower, this will not be entirely the situation. This is because of the rise of more stable and driven millennials who must be in their late 20’s to mid-30’s by now and who are more adamant to acquire their own homes. These millennials will make for some of the toughest competition in home buying.