If you’re in the housing market and the rising interest rates are concerning you, then keep reading below. This article will go over how the housing economy is being affected and give you some key information about mortgages and loans. 

The Buyer’s Perspective

In general, rising interest rates make buying or selling a home more difficult, and decreasing interest rates make it easier. So when mortgage interest rates increase, their affordability decrease. Qualifying for a loan is a key step in the home buying process, so timing is everything when getting your finances together for the housing market. 

The Seller’s Perspective 

Rising mortgage rates are going to make it more difficult for the seller to find a suitable buyer. Potential buyers are going to take into account the increase in the interest rate and eliminate many potential buyers. 

The seller is going to want to play the market wisely, and not ask for a price that is too high in a market with inflation. Therefore, the seller needs to consider coming down in total asking price in order to make up for the increase in mortgage interest rates. 

Cause And Effect

When interest rates increase, mortgages become more expensive, causing a decrease in demand in the housing market. This almost certainly leads to sellers coming down in their asking price. So buyer’s end up having an advantage in this situation. 

A Boost For Banks

Rising interest rates are always good news for the banks. The higher the interest rates, the more revenue the lenders/banks bring in. However, there is a delicate balance between rising interest rates and demand from buyers. If the interest rates get too high, the demand for mortgages decreases, hurting their revenues. 

The Big Picture 

The good news for home buyers is that even though interest rates are rising, they’re still at near historic lows. This means that even though buyers will need to go into debt in order to get their new home, the level of debt is at relatively low levels compared to other times in history. 

Time To Buy 

Now that you have a better understanding of how interest rates affect both home buyers and sellers, it’s time to put in the work. Finding a good financial advisor is key to securing your future. Put yourself in a good financial position to finally make that move into a new house.