For many people, buying a home is one of the most important financial decisions they will make in their lifetime. It’s no surprise then that mortgage rates are one of the most closely watched economic indicators. The recent rise in interest rates in Columbus ohio has had a significant effect on the mortgage market, making it more difficult for buyers to get a loan and for existing homeowners to refinance their loans. In this blog post, we’ll take a look at how rising interest rates are impacting mortgage demand in the housing market.
What Happened to Interest Rates for Columbus Ohio this Week
The Federal Reserve held its latest meeting this week and decided to raise interest rates 18 points. Overall, it is clear that the perception of the Federal Reserve raising rates throughout 2023 is likely to come to fruition based off the series of numbers that have come out this past week. The employment numbers (showing a staggering 517,000 jobs created in January 2023), CPI, PPI and retail sales are all high which all show promise of a booming economy, thus mortgage rates have been adjusted accordingly. The PPI calculation has recently been changed, picking different products to measure this number by. This is leading to higher mortgage rates, which can be detrimental to potential homeowners.
How Interest Rates Affect Mortgage Demand
The rise in interest rates has had a significant effect on the mortgage market. Higher interest rates in Columbus Ohio mean higher monthly payments for borrowers, which can make it harder for them to qualify for a loan. For example, a borrower with a $200,000 loan at 3% interest would pay about $878 per month, but at 3.3%, the monthly payment would be about $904.
Higher interest rates also make it more difficult for existing homeowners to refinance their loans. Borrowers who have adjustable rate mortgages (ARMs) may be particularly affected, as their monthly payments can increase when interest rates rise.
Current Mortgage Rates
At the time of writing,The Average 30-year fixed mortgage rate has increased from 6.12% at the beginning of the year to 6.32% as of this week. This is significantly higher than the rate we saw a year ago which was 3.92%. The average 15-year mortageg rate is currently 6.19%, up from 5.99% that we saw last week. The average 5/1 ARM is 7.65% which is also up from last weeks rate at 7.53%.
These rates are significantly higher than they were last year, when the average 30-year mortgage rate was 3.45%. The sharp increase in rates over the last year has had a significant impact on the mortgage market.
Rising Interest Rates in Columbus Ohio and Mortgage Demand
The rise in interest rates has made it more difficult for buyers to get a loan and for existing homeowners to refinance their loans. It has also had a significant effect on the housing market as a whole.
Higher interest rates for Columbus Ohio make it more expensive for buyers to purchase a home. This can put a strain on demand, as fewer buyers are able to qualify for loans or can afford to buy a house. This can lead to a decrease in home prices and a decrease in housing market activity.
Impact of Rising Interest Rates on Homeowners
For homeowners with adjustable rate mortgages (ARMs), rising interest rates can have a significant effect on their monthly payments. ARMs are typically set to adjust after a certain period of time, usually every year or two. When interest rates rise, the monthly payments on ARMs can increase significantly, making it harder for homeowners to manage their debt.
Options for Homeowners with Adjustable Rate Mortgages
Homeowners with adjustable rate mortgages have a few options for managing their debt in a rising interest rate environment. One option is to refinance their loan into a fixed-rate loan. This will allow them to lock in a fixed interest rate and avoid any future rate increases.
Another option is to refinance into a hybrid loan, such as a 5/1 ARM. These loans offer a fixed rate for the first five years and then adjust every year after that. This can be a good option for homeowners who may not be able to qualify for a fixed-rate loan but want to avoid large rate increases.
Impact of Rising Interest Rates on Homebuyers
For homebuyers, rising interest rates can make it more difficult to qualify for a loan. Higher rates mean higher monthly payments, which can make it harder for buyers to qualify for a loan. This can lead to a decrease in demand for housing, as fewer buyers are able to qualify for loans.
The rise in interest rates also means that buyers will have to pay more for their loans. For example, a buyer with a $200,000 loan at 3% interest would pay about $878 per month, but at 3.3%, the monthly payment would be about $904. This can make it more expensive for buyers to purchase a home, espcailly with the 6% interest rates that we have been seeing as of late.
Impact of Rising Interest Rates in Columbus Ohio on Refinancing
Rising interest rates can also affect homeowners who are looking to refinance their loans. Higher interest rates mean higher monthly payments, which can make it more difficult for homeowners to refinance their loans. This can lead to a decrease in the number of people refinancing their loans or selling their houses, which can negatively impact the housing market.
Conclusion
Rising interest rates have had a significant effect on the mortgage market, making it more difficult for buyers to get a loan and for existing homeowners to refinance their loans. This can lead to a decrease in demand for housing and an increase in monthly payments for borrowers. It’s important for borrowers and homeowners to understand how rising interest rates can affect them and to explore their options for managing their debt in a rising rate environment.
Here at Sell for 1 Percent we have a list of preferred lenders that our agents have worked with for years that can help you understand where you are at financially, how you can get yourself to a better place and which loan is best for you. Give us a call today to see how we can help get you into your dream home in the best possible situation when it comes to your mortgage loan.
