The current mortgage rate environment has caused a decrease in mortgage demand as interest rates reach their highest levels in nearly 23 years. Mortgage lenders are seeing fewer applications, as many potential home buyers are put off by the cost of borrowing compared with recent years. Rates for 15-year fixed mortgages spiked to 4.8%, the highest point since March 1995. On the other hand, the 30-year fixed-rate mortgage held steady at 5.4%.
The rising mortgage rates have made it difficult for many first-time buyers to enter the housing market. Many believe the current market conditions favor those already in the market, as well as those who can make a larger down payment. The current economic conditions may be enough to keep some potential buyers on the sidelines, as they may be unable to secure a loan or find a home that meets both their budget and their needs.
At the same time, lenders are still making sure that they are only lending to creditworthy borrowers. The new Mortgage Qualifying Restrictions known as the “Qualified Mortgage Rule” is making sure lenders are not offering overly risky mortgages compared to pre-2008 standards and that they fully explicate the terms and duration of any loans they do offer.
Although the market may be difficult for first-time buyers to get in, the current market conditions are encouraging for those already in the market. If you are planning to buy a home, ensure that you have a full understanding of the terms offered and that you are able to comfortably make payments on your loan.