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2022 inflation driving up mortgage interest rates, rents making housing scarcer for everyone

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Chicago (WLS)- Inflation in 2022 is pushing up mortgage rates and rising rents in the low-inventory housing market.

Nehada Sinanovic, her husband and their two children are now living with her mother-in-law and need more space. They were looking for a home to buy for a year and a half.

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“You can’t fall in love at home because I’ve definitely lost love over and over again,” she said.

No matter how much they offer, they seem to continue to be overpriced.

See | Tips to Help Chicago Renters Find Home Transactions

“We have a pre-approved letter and all the bank statements, but many also have it, so it makes no difference,” she said.

“Supply is very limited and many buyers are looking for it,” said Ifeta Redzovic, a First Gold Realty realtor.

In addition to low inventories, interest rates are rising. The average interest rate on a 30-year fixed loan is currently around 6.5%.

The Fed is raising interest rates to delay home purchases and reduce inflation. Some people who can’t afford a mortgage are looking at rent. The growing demand has forced rents to rise.

According to a recent survey, rents for one-bedroom apartments have risen 32% from a year ago, costing $ 1,870. Rent for a two-bedroom apartment rose 27%, costing $ 2,230. Still, for some, renting may be the best option in this market.

“No doubt, if anyone knows they won’t be here next year, they shouldn’t buy,” Redzovic said. “When you sell a house, you have to pay.”

But if the purchase is still the goal, Redzovic emphasized that the most important thing is to stay within budget.

“They keep in mind their ideal home, and now that interest rates are rising, monthly payments are getting bigger, so the ideal home is getting smaller,” she said. .. “So I tell them that your first home doesn’t have to be your dream home.”

If you’re considering a purchase, consider funding options. There are many other loan products besides traditional mortgages, such as low interest rate FHA loans and VA loans for veterans.

If you are renting, consider a private landlord rather than a business. Private landlords may be willing to negotiate rental prices.

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