According to the Federal Home Loan Mortgage Corp, the average rate nationwide for a 30-year mortgage jumped to 4.46 percent from 3.93 percent- the largest one-week increase since 1987 and the highest rate since July 2011. The increase in interest rates could cool off the region’s hot housing market in several ways. One, higher interest rates would mean prospective buyers could afford less house, possibly easing demand for new and existing homes. Two, the equity funds that have been buying up foreclosures throughout the region would likely go looking elsewhere for better ways to invest their money.
Here is a look at how rising interest rates could affect buyers, investors, builders and homeowners:
For home buyers, many of whom have struggled since the Great Recession and global credit crisis to qualify for mortgages, an uptick in rates would also cut into their buying power once they are approved for a loan.
Investors are likely to slow the pace of their distress-sale home purchases if interest rates rise and other investments become more attractive. Whether they discard the properties they have already purchased or hang onto them would depend on the demand for single-family-home rental properties.
Home builders would also have to adjust as prospective buyers struggle with reduced spending power. Some builders will scale back their search to existing-home listings. Others would settle for smaller new homes or for developments in more-remote locations. Builders would also face higher carrying costs for land and materials as they wait for enough buyers to close out a project.
For those already in their home with the intent to stay there, refinancing their current mortgage makes little sense if rates continue to increase. Mortgage lenders specializing in refinancing rates will likely go out of business.
Choosing the right attorney can make the difference between whether or not you can keep your home. A well-qualified Miami foreclosure defense attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Miami foreclosure defense attorney Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the website, www.miamibankruptcy.com.