If you are in the market to buy your first home or move up to a new one, one thing you likely have your eye on are interest rates. While rates are still near historic lows, they have been slowly but steadily creeping upward over the past few years. But what exactly do rising interest rates mean for home buyers in North Carolina?
You Will Pay More for Your Home
When interest rates rise overall, that means that the minimum interest rate for mortgages rises, too. Unfortunately for home buyers, a higher interest rate almost always means a higher monthly payment, even if the reason for the higher interest rate is of no fault for the buyer. Even if your credit score is perfect, higher interest rates mean that your monthly payment will be higher, more of your payment will go toward interest and you will pay more for your home overall at the end of your mortgage term.
Homeowners Will Stay in Their Homes Longer
After the Great Recession, the Federal Reserve lowered interest rates and lenders followed suit. Low interest rates meant people could more affordably purchase homes, which was a great boon to the economy at the time. Unfortunately, those rock bottom interest rates mean that buyers who sell their homes to buy a new one will be saddled with higher rates, and in some cases, the cost of the new mortgage will outweigh the benefits of getting a new home. In many cases, this means that home owners will stay in their homes longer rather than moving up to new ones and may opt to renovate their homes to fit their changing needs. While this is a great thing for the housing construction industry, for potential home buyers it could mean…
There May Be Lower Inventory
Most of the homes on the market, especially for first-time buyers with modest budgets, are existing homes, not new construction. With rising interest rates incentivizing homeowners to stay in their homes longer to avoid a higher rate on a new mortgage, first-time buyers will to feel the squeeze as inventory falls.
You may think home ownership is out of reach with rising interest rates, but the NC Housing Finance Agency might be able to help. Our down payment assistance and other resources may help as rates rise, putting home ownership back in reach.
Learn more about the Agency and how it can help you become a homeowner at www.HousingBuildsNC.com/.
