For those in the market to purchase a property, all eyes and ears have been on what’s predicted to happen with mortgage interest rates this year. Rates have been historically low for many months, helping to fuel the already incredibly strong real estate markets across the country and here in Florida.
It has been widely reported, however, that the interest rate is rising – and will continue to rise in the coming months. It currently stands at above 3%. In early 2022, the Federal Reserve will begin lessening its purchasing of mortgage-backed securities and bonds. This seems to be signaling a shift in the financial arena leading industry experts to believe that mortgage interest rates will continue to go up through 2022. In fact, the National Association of Realtors has predicted that by mid-year of 2022 the interest rate will be 3.6% for a 30-year fixed mortgage.
So what impact will this have on Florida real estate market? The inevitable result will be that it will make it more expensive to purchase real estate in the area. Leonard Kiefer, Freddy Mac’s deputy chief economist, says that a year from now real estate will be less affordable even if prices remain the same because of this rise in the interest rate. The home prices, however, have already been on the rise in the Southwest Florida area.
There is a silver lining with the rising mortgage rates, however. With real estate less affordable for many buyers, it should help to stabilize the market. Currently, buyers are struggling to keep up. Bidding wars are the new norm, and often properties are trading at higher than the asking price. A higher interest rate should help to curtail this and limit competition. When this happens, it is likely that prices will balance out in response. Though the ultimate affordability may be less, it could work out to be better for buyers in the long run as prices will be forced to stabilize.
The rising mortgage rate could signal a big shift in the market. Time will tell how much the impact will affect buyers and sellers of real estate in Florida.
For more information on real estate in Southwest Florida contact Ascendia Group, (941) 306-4242 www.ascendiagroup.com
Sources: NAR, National Association of Realtors and Freddy Mac
