Take Advantage of High Mortgage Rates

Current State of the Market

Rising interest rates impact a buyer's purchasing power and luxury home sales are the first sector of the market to feel this impact with average days on market increasing slightly in recent weeks. Some real estate experts are forecasting a drastic reduction in home values near term; however, the lack of available inventory is an underlying factor that could shield home values from falling. The greater Tampa area remains one of the five fastest growing metropolitan areas in the country. When demand exceeds inventory, then home values will hold, or even continue to rise. 

Over the past two years the percentage of cash buyers has increased substantially in Florida. Cash buyers are not impacted by rising mortgage rates and will continue to fuel the market near and medium term; creating demand. There are also buyers who have no choice but to buy a home regardless of interest rates due to relocation or other matters that have forced a move. The buyers most impacted by rising rates are those who own a home and simply want to move locally. Many of this group have refinanced in recent years to rates below 3.5%. To sell and buy now would require giving up the lower mortgage rate for one that is nearly double their current rate. 

Taking Advantage of Higher Mortgage Rates

There is a way to take advantage of today's higher interest rates. Smart sellers will leverage the power of their low interest rate when they market their home for sale. The savings a potential buyer can achieve by assuming last year's rates is impressive. In one example, the difference in monthly payment for a $350,000 home at 3% versus 5.4% is nearly $500 per month. That same $500 per month equates to $70,000 worth of house. 

Advantage for Sellers

If a seller secures a qualified buyer who can pay the difference between loan balance and market value in cash, that buyer can assume the existing mortgage and its low interest rate making that home most appealing to any buyer who is financing. There are nuances for each type of mortgage that would need to be considered but even VA loans are assumable under the right circumstances.

Advantage for Buyers

For those who are wanting to buy, begin asking the question, "Is the loan assumable ?". You may find a situation where you too can assume a 2020 interest rate in 2022.




Work With Toni

Toni Hedstrom, Realtor®, e-PRO® provides professional real estate services throughout the Greater Tampa Bay area. Toni concentrates on providing the most innovative technology resources for both buyers and sellers. With the internet playing a crucial role in today's real estate market, Toni's sellers can rest assured their property will be presented via high impact marketing with a focus on strategic placement on the World Wide Web.