Many real estate experts have noted the possible effect that rising rates will have now and in the near future on the value of homes. Low mortgage rates were a major factor in the market’s recovery the past several years.
The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors (NAR) all project 2017 mortgage interest rates will rise. Increasing interest rates will definitely impact purchasers and may stifle demand. The fed has already indicated they will most likely raise rates soon, possibly in March.
In a recent study, “rising mortgage interest rates and their impact on mortgage affordability” was named by 56% of real estate industry professionals as the force that’ll have the most significant impact on the 2017 U.S. housing market. Currently, low inventory of homes for sale is the major cause of home values rising, whereas a mortgage rate increase will most likely slow the demand lowering values.
To this point, Pulsenomics, recently surveyed a panel of over 100 economists, investment strategists and housing market analysts, asking the question “In your opinion, at what level will the 30-year fixed rate mortgage rate significantly slow home value appreciation?” The survey revealed the following: Most believe interest rates would need to reach 5% or more to impact home prices.