The rates for mortgage interest rates rose last week for the second week in a row adding to the angst many first-time homebuyers are feeling due to the lack of inventory and heated competition for those few houses. Far from the higher interest rates, we have seen in recent history these rates still come as a shock to many who are new to the mortgage market. Last week’s increase marked a jump of 7 basis points from the previous week landing at 4.03 percent according to Fannie Mae. A year ago that rate was 3.42 so from some buyers’ perspective this is a huge increase.
Just 10 years ago, while we were still in crisis mode and banks were struggling and foreclosures rampant, rates on a 30-year mortgage were 6.4-7 percent. Today’s rates may seem a bargain, but many of the young people looking for homes today were too young then to pay attention. They were busy with school, some racking up tremendous debt to help pay their way. Now, after working hard to build credit and pay off those loans, they act as stewards of their hard-earned money taking caution to invest in the right home — when they can find one.
We have been reporting since last year that inventory is low so it is no mystery that it is challenging to find a home. Coupled with that, a prospective buyer has to maintain a good credit score, which as any adult knows takes hard work and vigilance. Doing all that hard work preparing for a home and then the hard work and tremendous amount of time involved in finding a home makes this latest rate increase a hard pill to swallow.
Even though an interest rate increase of a half percent seems modest, the increase will push some marginally qualified buyers out of the market. Comparing last July’s rate of 3.42 to today’s 4.03 means a payment on a $200,000 house that is nearly $185 a month higher before taxes and insurance. When you are eating Top Ramen and celery and scrimping to build credit, it is no wonder that some would be devastated.
The lack of affordable inventory that frustrates those looking for homes is compounded — not only by rising interest rates — but by rising housing prices. We continue to outpace last year’s prices across the Coeur d’Alene Multiple Listing Service geography. As shortages persist, prices will continue to rise and the trend shows no sign of slowing in the near future. As vacationers visit and see our fantastic landscape and experience our lifestyle, demand will likely continue to grow.
Meanwhile lenders and government continue to find creative ways to help first-time buyers get into homes. Ask your Realtor how you might qualify.
Trust an expert…call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.
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Kim Cooper is a real estate broker and the spokesman for the Coeur d’Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d’Alene Association of Realtors, 409 W. Neider, Coeur d’Alene, ID 83815 or by calling (208) 667-0664.