Area brokers comment on rising mortgage rates

Local real estate broker managers surveyed by the Southeast Missourian, while acknowledging recent increases that have pushed the 30-year fixed rate mortgage to 7.79% — the highest in 23 years — are suggesting a broader historical view of rates.

Liz Lockhart

Liz Lockhart

"Though we are not yet at a historical high in (mortgage) rates, the current generation of buyers has not experienced these rates. It is a psychological hit to them as well as a very real limitation in what they can afford. Even with very limited inventory, it is difficult to move a house right now," said Liz Lockhart of Riverbend Realty.

Jared Ritter

Jared Ritter

"The truth is, these current rates are not unheard of," Ritter Real Estate's Jared Ritter said. "When there's an interest rate 'sticker shock' of several percentage points different from what your neighbors recently purchased a home with, this will weigh on a buyer's mind."

Tim Meredith

Tim Meredith

Tim Merideth of Century 21 Premiere Realty and Century 21 Ashland Realty said he encouraged looking at it from a historical perspective.

"For the last 50 years, the 30-year mortgage has average 7.74%. While rates today are significantly higher than 18 months ago, they're only marginally higher than the 50-year average," Merideth said.

Bill Cole

Bill Cole

"People of a certain age are well aware of much, much worse rates than right now," said Edge Realty's Bill Cole, in a reference to the 18.5% mortgage rate during a time of rampant inflation in October 1981. "It's just that first-time homebuyers have never witnessed that."

The lowest-ever 30-year mortgage rate, according to Federal Home Loan Mortgage Corp. — known as Freddie Mac — was quite recent. A rate of 2.65% was recorded in January 2021, during the height of the COVID-19 pandemic.

Silver lining

"September (2023) was our largest September in the 20 years we've been a company in terms of written contracts. (Things) are not as bleak as one might imagine. People still need to live somewhere, although they may not be able to afford the same house as they could when rates were at 3%," Cole said.

"If rates go down even a couple of percentage points, you'll see more sellers willing to list their houses, hopefully sell at a profit, and be willing to sacrifice having a lower rate if it means they can pocket some money and move on to another home with a rate they deem reasonable," Ritter offered.

"Both buyers and sellers are having to adjust their expectations and be patient," Merideth said. "Real estate is still a sound long-term investment."

Of note

Reuters news agency reported the interest rate on the most popular U.S. home loan has jumped to its highest level since September 2000, marking its seventh straight weekly increase and driving mortgage applications to a 28-year low, a survey showed Wednesday, Oct. 25.

"Mortgage activity continues to stall, with applications dipping to the slowest weekly pace since 1995," said Joel Kan, Mortgage Bankers Association vice president and deputy chief economist. "These higher mortgage rates are keeping prospective homebuyers out of the market and continue to suppress refinance activity."

Do you want more business news? Check out B Magazine, and the B Magazine email newsletter. Go to www.semissourian.com/newsletters to find out more.