Interest Rates Rising and What That Means for You

We are in full swing in the Spring real estate market here in Whatcom and Skagit Counties. It is busy as ever for buyers and sellers, and we are very happy to see a lot of new inventory hitting the market weekly. The main conversations being had this month is around interest rates. After we went from record lows in 2020 and 2021, we are now seeing interest rates rising quickly.

Interest rates rose to a decade high; a 30-year fixed mortgage is now at 5.25%. This is creating a bit more stress, for already stressed-out buyers. That is nearly 2 points higher than it was sitting at the beginning of 2022. Home prices in Whatcom and Skagit County are continuing to sell within a matter of days despite the rising interest rates.

“Given the rising borrowing costs and prices, housing is especially difficult for entry-level buyers,” says Jeffrey Roach, chief economist at LPL Financial, a national broker-dealer. The rapid rise of mortgage rates will likely ease demand for homes as more buyers find themselves unable to afford houses at current prices, Roach says. That trend likely won’t lead to lower prices, however, as the number of available homes is low. NAR said the inventory of unsold existing homes was 950,000 in March, just a two-month supply. “Given low inventories, home prices will likely stay elevated even though demand has softened,” Roach says.

Now, what does that mean for local buyers and sellers. For those of you listing your homes in the next year, fear not, despite the rising interest rates demand is still high with buyers. For buyers who are borrowing, this means that for every point the interest rates go up, your buying power goes down by 10%. Try not to get discouraged, with interest rates always changing, you are not locked into this rate forever. When rates go down again, you will have the option to refinance for a lower rate.