Mortgage rates have steadily risen over the last few weeks, leading many potential homebuyers to pause their search. While it is understandable to be concerned about higher rates, this could actually be an opportunity to buy the home you’ve been searching for. Fewer buyers in the market could mean less competition for you when shopping for a home. Let’s look at what this means and how you can capitalize on this situation.
According to the Mortgage Bankers Association (MBA), mortgage applications declined by 13.3% in just one week due to rising mortgage rates. While rising rates are causing some potential buyers to step back from their search for a new home, those who stay the course will likely face less competition when looking for a house.
Silver Lining to Higher Rates
The current market has so few homes available that any reduction in competition can be a big benefit for buyers. Less competition means more bargaining power, as sellers may have fewer options for finding potential buyers who meet their criteria and have already been approved for a loan. As such, they may be more willing to negotiate on price or terms than before.
Furthermore, if you're already pre-qualified, moving forward with your purchase will become easier and faster since fewer offers will come through on each property listed.
One thing that all buyers should keep in mind is that if you’re looking for a certain type of loan (like an adjustable rate mortgage or ARM), it might not make sense anymore because these types of loans are directly affected by changes in interest rates. That said, fixed-rate mortgages remain attractive even with higher interest rates since their payments remain unchanged throughout the life of the loan, regardless of changes in interest rates over time.
Rising mortgage rates don’t necessarily mean that you need to delay your plans to buy a home – there are opportunities here too! If you stay focused and opportunistic, you can negotiate with less competition while still getting favorable terms and prices due to current market conditions caused by rising interest rates and low inventory levels nationwide.
Knowing what type of loan is right for your circumstances is also key here; fixed-rate mortgages remain attractive even with higher interest rates, so they should definitely be considered when searching for financing options.
When done right, rising mortgage rates can result in an opportunity rather than an obstacle!
* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.