How Do Recent Rate Hikes Impact Buyers & Sellers?

What caused the recent interest rate hike? What impact will rates have on buyers and sellers? I'm joined by a home loan expert to help me break it all down for you.

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In the wake of the election, we've seen a recent interest rate hike. Today I'm joined today by Hovik Sahinian of New American Funding to talk about the underlying causes of why the rate hike happened. 

As Hovik points out, we have been expecting a hike for a while now, and we knew it would happen after the election, regardless of the winner. The market has taken this into account, and we're seeing people move away from the bond market and into the stock market. This naturally causes an increase in rates, and we've seen rates go up about 0.5% since the election.

That 0.5% increase has had an effect on buyers, as Hovik points out; he's seen clients have up to a $50,000 decrease in the mortgage amount that they qualify for. For example, a buyer who qualified for a $500,000 loan before the rate hike would only qualify for about $465,000 after. 

If you're selling, now might be the best time to get a deal done.

Home sellers need to be vigilant as well after the rate hike. As Hovik says, if you're close to where you need to be as a seller right now, you should take any opportunity to close your transaction sooner rather than later because rates will continue to go up. This means your house will be less affordable to more and more buyers.

It is still a great time to buy a house while rates are still near historic lows. Hovik says that if he was a buyer getting pre-approved for a loan in this market, he'd leave himself some cushion in case rates do creep up during a transaction. That way, you won't have to go through the qualification process again.

I'd like to thank Hovik for joining me today. If you have any questions for him about home loans, give him a call at (818) 808-7790.

If you have any questions about real estate in Porter Ranch, as always, give me a call or send me an email. I'd be happy to help you.