Higher mortgage rates do mean paying more in long-term interest and, in some cases, a higher monthly payment. But they aren’t all bad.
In fact, if you’re on the hunt for a house, they can actually offer quite a few benefits.
Are you trying to buy a home this summer? Here’s how higher mortgage rates might be able to help your case.
1. They reduce competition.
As rates rise, more and more homebuyers get priced out or step back. For those that keep at it, that means a much less competitive market. They may be fewer bidding wars, and you might not have to bid as high to get noticed.
According to Realtor.com, higher rates have already helped in this department. New home sales dropped 16% in April, and for most of May, homes were staying on the market longer too.
2. They slow home price growth.
Another big benefit is that home prices start to moderate. With fewer buyers on the market, there’s less over-bidding, and sellers don’t have as much of an upper hand. While this won’t immediately mean prices will drop, it does help slow them down — a big perk for today’s buyers (especially given how fast prices have jumped in recent years).
It’s already resulted in increased price cuts. According to Redfin, almost one in five sellers dropped their price in May — the highest share since October 2019.
3. More housing options.
Finally, there are more homes to choose from. When there’s less demand, there are more listings, and homes stay on the market longer. In fact, Realtor.com data shows that new listings were up 6% annually in the last week of May, and active inventory was up even more.
According to the report, “This is the biggest year over year gain ever observed in our weekly data history, which goes back to 2017, and the first consecutive weeks of gains since 2019.
Get your foot in the door today
Want to start putting down roots in your own home? Get in touch with Premier Nationwide Lending today. We can help you run the numbers and determine your best path forward.
Park Cities Mortgage is an Equal Housing Opportunity lender. Sponsored by NTFN, Inc. 5950 Sherry Lane, Suite 230, Dallas, TX 75225 | NTFN NMLS 75333.