Hope for Homeowners


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. 

  1. Debbie Schiber

    Makes alot of sense…wish I would of tbought of! Thanks Deb

  2. Pat Wall

    I don’t believe this at all.
    In fact am really disappointed to hear you think banks will do anything to ease credit. But they sure will increase origination and make money off of rising rates with locking fees etc. Since we don’t represent banks–how is this good for us or our clients?
    I was looking to pass some hope along but after reading this–won’t be quoting you.

  3. Lucian

    It will be a stupid decision from banks to ease standards on mortgages; this is one of the reasons we are where we are today. Not everybody have to own a home; the “American dream” of owning a home is just a gimmick brought to us by lenders, to make us buy, even when we won’t qualify…

  4. ni harr

    The notion that we have been under tight credit conditions is comical. How is it that the lowest interest rates in history equal tight credit. In fact, the opposite is true. The real question is what will happen when the next busy occurs as a result of FED stimulation…

  5. It will be good to get more settled into appropriately balanced lending criteria; after all the horses were let loose out of the barn, the doors were slammed shut; much too strongly locked and way too late. Yes, it was over the line into ridiculously stringent, however, it seems to be getting a little better. Now nor ever, would I want to see it return to those terribly loose standard that contributed in a major way to the woes of the crash; we, REALTORS, warned congress when that was in fact happening in our Major Issues and Talking Points for several years in ’02, ’03, ’04, ’05… but apparently, putting the brakes on irresponsible lending was not appealing to the friends of those lenders in the nations legislature. Let’s all do a better job in this cycle PLEASE!

  6. ni harr

    The notion that we have been under tight credit conditions is comical. How is it that the lowest interest rates in history equal tight credit. In fact, the opposite is true. The real question is what will happen when the next bust occurs as a result of FED stimulation…

  7. Warren Cooper

    I read your message regarding the present rise in interest rates. I believe your message was intended to state that ‘the greatest amount of qualified buyers will have access to mortgage “loans” and not interest?

    I agree with your opinion, having worked in banking and mortgage banking for over 20 years prior to my real estate career. Let’s hope the bankers continue to feel the cattle prod from NAR on this issue without repeating their underwriting methods used prior to 2008 which led to the mortgage crisis.

    Best regards during your tenure.


    Warren Cooper

  8. Henry F. Ferguson

    This is great news.We need relief from over zealous underwriters,who are paid a salary
    and not realy concerned about the number of approved loans.Toooo much scruny on insignificate items to prove their worth.

  9. carlos villaflores

    what happened now to the proposed legislation to help underwater homeowners who are not fannie or Freddie mac insured. there are approximately 3.5 million homeowners in this situation

  10. This would certainly be a help to the tough qualifying process for many buyers in middle 600′s scores. As long as rates stay in the middle 4′s% will continue to see the market thrive

  11. Interesting twist.
    How much control do lenders actually have to ease lending restrictions? I’m not sure that fewer refis translate to more originations for home purchases. Good to put out hopeful messages though.

  12. I agree that banks will begin to make loans more accessible. After all, how much were the banks making lending at the lowest rates in two generations? As rates go up, banks will be more eager to make loans. It just makes sense.

  13. Good Post, Just had a conversation with someone about this.

  14. Anne

    The reality is that until and unless we have a thriving economy, we will not see a healthy real estate market. The unrealistically low interest rates cannot make it all better. Lenders realize that there is nothing to drive the market; no economic growth. Hence the tight credit standards.

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