I Want to Buy a Home…
How In The World Can Rising Mortgage Rates Be Good?
In the current market for Northeast DFW Homes, prices are high, the supply of homes is low and credit from mortgage lenders is tight. In fact, mortgage lending rates have gone up almost a full point from the record lows of only six months ago.
If you are thinking about buying a home, the higher cost of a mortgage will understandably make you anxious about your future in the housing market. A recent article in the Washington Post indicated more than half of home buyers would be discouraged from entering the housing market if rates reached 6%. In the wake of sub 3% mortgage rates, current rates may sound high but the current rates are still incredibly low by historical standards.
Now for the Other Side of Rising Mortgage Rates.
Mortgage lenders have been swamped with homeowners refinancing to take advantage of the low mortgage rates. Many homeowners (with strong credit scores) have refinanced multiple times as rates continued dropping to levels that no one ever imagined possible. The low rates generated transactions for the banks and the banks charged fees and made money on each of those transactions. Business was good and there was not a shortage of new/repeat business. Now that the rates are beginning to rise the refinance business will, without a doubt, slow to a crawl.
Here’s the upside for consumers that haven’t been able to enter the market for Northeast DFW Homes because of strict lending standards…
Banks still need to make money!!!
Lenders will need to generate transactions and to do so there is a very good chance they will ease lending standards to make sure the greatest number of buyers qualify for mortgages at the higher rates. The higher mortgage rates are not necessarily bad news for real estate as long as they are balanced by making credit available to more consumers.
If you’re interested in the market for Northeast DFW Homes but you’ve been blocked by stringent lending standards it may be time to contact one of our preferred lenders and see what you can do to improve your FICO score. If the economy can recover as much as it has under tight credit conditions, it may do even better as credit steadily returns to normal.