LANSING, Mich. (WLNS) – Mortgage rates are the highest we’ve seen in 14 years and they are having a serious effect on the housing market.
“Today I probably would say six and three quarters would be a good average that people can plan on seeing,” said Brooks Warner, associate broker at Keller Williams Realty in Lansing.
A rate that was last seen in 2008 during the recession is causing some people looking for a home to panic. But Warner says that hasn’t stopped them from making offers.
“Homes that are priced appropriately are still selling quickly. I wrote a home for a great buyer last week and the list agent had six offers on the home,” Brooks said.
Just 7 months ago, mortgage rates were around 4%.
“If you bought a home for $200,00 with 20% down. Your principal and interest payment on that would have been $763.86,” Brooks said.
But today’s monthly payment on that house?
“If you buy a $200,00 home with 20 percent done at six in three quarters interest rate your principal interest payment is $1037.76,” Brooks said.
Warner says although it’s not favorable for homeowners right now it can help the market overall.
“The growth we are having was unsustainable. So increasing interest rates to slow things down is probably good for the long-term health of the market,” Brooks said.
But one financial expert says with these rates you should hold off if you can
“They’re probably best served by just sitting tight for the moment. Because one of two things has to give here either interest rates have to begin to go back down making the borrowing cost less or the housing costs have to come down,” said Gary Wedge, a certified financial planner at Newage Advisors.
Wedge says consumers should expect to see interest and mortgage rates continue to climb until the federal reserve gets a hold of inflation.