Home Buyer’s Face Headwinds in 2022
Home Buyers face a multitude of obstacles in 2022 when purchasing real estate in Ketchum ID. Record low inventory, strong demand and record high home appreciation has now combined with rising interest rates.
What the Federal Reserve did and why
The Federal Reserve raised interest rates on Wednesday for the first time since 2018. As a result, mortgage interest rates probably will go up, and rates on home equity lines of credit certainly will.
Fed interest rates are moving higher as an inflation-fighting measure.
Will Interest Rates Continue to Rise in 2022?
With inflation rising, the Fed is expected to raise the federal funds rate multiple times this year. The rate started the year near 0% and speculations are to end the year above 1.5%, according to the futures market’s CME FedWatch Tool.
Where Are Mortgage Rates Now?
After reaching a record low of 2.65% in January 2021, the average rate for a 30-year fixed rate mortgage topped 3.92% in mid-February before declining to 3.85% in early March. The average rate for a new mortgage is now 4.16%.
How the Fed Rate Increase Affects Home Buyers
The median sales price for real estate in Ketchum, Idaho is $1.39M. Assuming a Buyer places 20% down and has a mortgage of $1.112M.
Monthly Payments at an interest rate of:
2.65%= $4,481
3.11%= $4,754
3.85%= $5,213
Mortgage rates tend to move in the same directions as federal rates. Mortgage rates will likely trend upward all year.
How the Fed Rate Increase Affects Home Sellers
If you’re selling real estate in Ketchum, Idaho you are probably taking offers more seriously when they’re from buyers who have been preapproved for a mortgage or paying in cash.
The Buyer for My Home Is Pre Approved; Can I Relax?
To have confidence in a buyer’s ability to afford your home, make sure the pre-approval is based on current interest rates.
Buyers pre-approved at yesterday’s lower rates may no longer qualify for the same loan amount at today’s higher rates.
