With the current rise in interest rate by half a percentage point to one per cent, this is the biggest increase in more than two whole decades. Many people worry how the current continuous rise of the lending rate will affect their financial situation in terms of real estate. However, with the proper knowledge about how interest rates impact the process of buying a home, the rise of interest rates are nothing to be feared about.
Because the market today is so different from what it was a couple months ago, there is a huge misconception with the market slowing down or prices decreasing. In many situations, there are now only a couple offers per home as compared to multiple offers such as 10-15. However, homes are still selling for record prices in specific areas.
Now why is that?
In this market with the rise in interest rates, buyers are unable to receive a larger loan to buy a home, making it more expensive. The affordability of homes drastically decreases. Although this may seem like a negative impact, this effect also drives out competition with other buyers. The demand for housing will be more narrow and specifically catered towards serious buyers.
Therefore, it is essential that buyers see a mortgage broker or a bank to get pre-approved before searching for a home. This helps narrow down your search and look for homes that fit your budget accordingly, making it more of an efficient search process. Both the mortgage broker and the bank can help take a detailed look at your financial situation and decide how much money you are able to borrow. However, a mortgage broker acts as a mediator by helping their customers find the best rate for their situation, while a bank or other financial institution decides whether you qualify for the loan and offers you their flat rate. Here at MC Real Estate Group, we have good relationships with industry professionals that we can refer for our clients to have a better understanding of mortgages, interest rates, and their financial situation.
Thank you,
MC Real Estate Group
Melvin Chan PREC* | (778)-709-7018
Milton Chan PREC* | (778)-709-7016
Ethan Chan | (778)-985-8388