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The Federal Reserve raised its short term interest rates by three-quarters of a percentage point on Wednesday, further exacerbating a housing affordability crisis more than two years in the making. For buyers already spread thin by elevated borrowing costs, the latest rate hike is a tough blow that could stop many dead in their tracks, but for those who can still afford home purchases, a seasonal slowdown presents new buying opportunities, Realtor.com reports.
As more would-be buyers are priced out by record high home prices coupled with surging interest rates, those forging ahead are finding less competition and more bargaining power. In addition, a growing share of sellers are being forced to lower their expectations to accommodate a smaller pool of budget-conscious buyers, and that could amount to price drops in some overheated markets.
According to Freddie Mac, for the week ending Sept. 22, the average 30-year fixed mortgage rate increased to 6.29%, up from the previous week’s 6.02%, which was already the highest level seen since 2008.
“There is no doubt that the increasing mortgage rate will make homebuying even more challenging,” notes Realtor.com and economist Jiayi Xu in her analysis. Nonetheless, she adds, “buyers may still find opportunities, as these changes coincide with the time of the year when buyers have historically found the best market conditions to obtain more bargaining power.”
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