CLEVELAND — The U.S. Federal Reserve raised its benchmark key interest rates three-quarters of a percentage point. Announced this week, it is the largest increase since 1994 and people are concerned about how it will affect the housing market.
What You Need To Know
- The U.S. Federal Reserve increased key interest rates, which affects the economy, especially the housing market
- A Cleveland realtor believes the demand for houses will stay the same despite the increased interest rate
- KeyBank said “pre-qualification” is a good way for prospective homebuyers to budget and plan for a monthly mortgage payment
“I don’t see a change in the amount of people looking to buy,” said Ali Chapin, a Cleveland-based real estate agent. “What I expect to see is that buyers in different price points may shift.”
Chapin recently listed a house on the market and discussed how the rate hike could affect selling it.
“We expect demand to be quite high, and whereas maybe six months ago we might have had a dozen offers, it’s possible with the shift in the market we may have more like a handful—four or five offers, but we do expect the house to sell at the asking price,” she said.
Chapin said she believes there are positive aspects to consider.
“It’s great for buyers who have been frustrated over the last year if they’ve written several offers and haven’t been able to secure a contract on a home,” she said. “What we likely will see is that buyers will shift in terms of their price point, so the ability to purchase a home and to win a contract is probably going to improve.”
She said since the demand for houses is still high, but the supply is low, prices should remain steady despite the change in interest rates.
Additionally, KeyBank Home Lending Leader Doug Reilly shared guidance for prospective homebuyers.
- Talk with your banker to get pre-qualified as early in the process as possible. This provides a competitive advantage in that it shows your preparedness and ability to close on a home faster. In today’s market, these factors can help your offer be more likely to be accepted.
- Pre-qualification is also a good way to budget yourself, ensuring you have an accurate estimate for your monthly payment and cash required to make an offer. With the speed of homes selling on the market, being prepared to make an offer when opportunity strikes can make the difference in landing the right home for you.