QUINCY (WGEM) – Rising mortgage rates are affecting people buying new homes in all three states. A local realtor and mortgage lender said your money won’t go as far as it did just a few months ago.
State Street Bank mortgage lender Krista Snyder said just months ago that people could afford bigger homes because of low interest rates, but now, for the same price, they’re getting smaller houses.
“You can get a 1,200 square foot house for $150,000 to $175,000. Maybe a year ago it might have been in the $130,000 or $135,000 range,” Snyder said.
“A lot of people are freaking out because interest rates are over five percent, but really that’s not a bad interest rate,” Snyder said. “They were so low for so long that now that they’re starting to go up, people are a little scared.”
She said, right now, the interest rate on a 30-year fixed is 5.25%. Four months ago it was around 3%.
Farlow Property Experts Chief Broker Jeremy Farlow said the amount you would have spent before would not earn you as much now.
“So today, either your payment is going to be higher than it would have been, or if that was your maximum monthly payment, then you’re going to have to find something else that’s a little less. expensive,” Farlow said. “If you’re looking at 5-6%, you can see here that you’re losing $20,000 in buying power. Same payment just because of interest rate changes.
But despite higher interest rates, the housing market remains tight. He said that before COVID-19, there were 253 homes available in Quincy. Now it averages around 35. The bottom 10 are the houses no one wants and the top 10 are the ones most people can’t afford.
“Instead of having 250 weird choices, you only have 10. That’s what makes this thing crazy,” Farlow said.
He said there was also a huge cost in waiting for rates to come back down.
“If you’re waiting for prices to fall, you should probably buy now because your buying power will be so much less if interest rates continue to rise, as many people are predicting,” he said.
Farlow and Snyder both predict that rates will continue to rise through the end of the year. Farlow said it would likely rise to 6% before falling back into the 5% range.
Farlow and Snyder said there are a few tips you can follow to buy the home you want, despite high interest rates.
Snyder recommends that you use a real estate agent and be pre-approved by the bank. So when a home you’re interested in comes on the market, you’ll have a better chance because you’ll know your price range and where you stand. .
They said if you could put more money aside, it would save more in the long run and grow equity faster.
Finally, you can lower your interest rates by having a higher credit rating.
Copyright 2022 WGEM. All rights reserved.