How Will Mortgage Rate Hikes Impact Home Sales?

When mortgage interest rates begin to climb, experts immediately begin to discuss home affordability indexes. They calculate how an increase in rates will slow home purchases as more and more potential buyers are priced out of the market. Today, with home prices also increasing, many believe that home sales may slow down rather dramatically. This may prove to be true in the long term. However, in the short term, increasing mortgage rates may have the opposite effect. Many buyers who have been sitting on the fence may realize that delaying their purchase no longer makes sense. Last week, in a CNBC article, Matt Weaver of Florida-based PMAC Lending explained the impact an increase in rates will have: These increases really help the home-buying market. It really gets buyers to really understand that wait a minute, rates are at an all-time low, let s react now, let s react before they go higher’.” As an example, we can look to 2013 when interest rates spiked up by a full percentage po
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