By NAR 2013 President Gary Thomas
We’ve seen interest rates rising recently.
Rates on 30-year fixed mortgages have gone up almost a full percentage point since reaching record lows six months ago.
REALTORS and consumers are understandably anxious about what this means for the real estate market. While there is currently no evidence of rising interest rates slowing the economy, they will invariably have an impact on loans.
I believe there is reason for hope. Although it’s likely that fewer people will refinance, since they already have low interest rates, banks will still need to make money. As a result, they may need to increase loan originations. To do so, there is a very good chance that lenders could ease credit standards away from over-stringency to ensure the greatest number of qualified buyers have access to mortgage interest.
While you may be hearing concerns from your clients about rising interest rates, don’t despair. Tell your clients that it’s not necessarily bad news for real estate if rising interest rates are balanced with opening credit to more consumers.
We’re hopeful—and it’s more than just a glimmer—that if the economy can recover as much as it has under tight credit conditions, it may do even better as credit steadily returns to normal.