HUD Articles
Homebuyer Needs and Interest Rate Fluctuations
June 15, 2023
Clearly, the topic about interest rates for mortgages is not going away any time soon. Even though the Feds are holding steady at the rate as the date of this article, will it continue to rise and at what rate and how often is anyone’s guess. However, the acceptance of the ever changing interest rate could eventually “normalize”. What do we mean by “normalize”?
Like anything else, it really boils down to what we’re used to. In other words, after we’ve lingered around the same thing for long enough, we can begin to accept it as normal. For example, think of the smell of fresh baked cookies. You walk into to a kitchen or bakery where those cookies are and…ahhhh…such a wonderful smell! Well imagine how the employees of the bakery feel about the smell of those fresh baked cookies. Perhaps after some time working there, they’ve grown so accustomed to it, they may not even notice the smell at all. Has the smell changed? Did it get worse, or disappear altogether? No. It’s the same it’s always been, but the employees have grown used to it, so it has less of an effect on them.
Take this same concept with mortgage interest rates. After hovering around a certain rate for a long enough period of time, consumers may likely begin to accept that the current interest rate, and it’s accompanying fluctuations are the ‘norm’. In such situations, it may prompt them to proceed with their purchase anyway because even though the rates may remain higher than a year or two ago, the need to purchase may become increasingly more urgent. Did their job or family situation change? These things can happen no matter what the current cost of money is. Although not financial professionals (and probably not life coaches either) real estate agents do well to have a basic understanding of the climate of potential buyers in their market so that they can direct them accordingly.
Therefore, be sure to take the time to see what your client’s needs are for purchasing their home, despite the everchanging thing that is the mortgage interest rate.
