Home News ‘Scary’ mortgage rates, sticker shock forcing homebuyers to walk away from contracts, broker says

‘Scary’ mortgage rates, sticker shock forcing homebuyers to walk away from contracts, broker says

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With interest rates on 30-year fixed mortgages doubling compared to a year ago and the housing market facing an “affordability drop,” one real estate broker warned potential buyers of pending deals. is likely to be withdrawn with no repercussions.

“These are a little bit of a frightening number,” said Pamela Liebman, president and CEO of Corcoran Group.Morning with MariaWednesday. “Nobody gives a mortgage contingency when the market is frenzied and it’s going up, up, up.”

“But sellers are a little more desperate to complete these deals, so we’re offering these contract contingencies,” the broker continued.

As Mortgage rates hit multi-year highs As the week went on, market demand began to cool, and a Redfin report found states within the Sun Belt had the highest rate of contract cancellations. Liebman says many homebuyers back off after feeling the shock of a mortgage sticker.

Mortgage rates doubled vs. refinancing hit 22-year low a year ago: survey

Corcoran Group president and CEO Pamela Liebman said in ‘Mornings with Maria’ on Wednesday, Sept. 28, 2022, that ‘horrifying’ mortgage rates are causing a ‘decline in affordability’ in the real estate market. I was. (AP Newsroom)

Mortgage rates have risen by more than 1 percentage point over the past six weeks. At the end of the week of September 23rd, the 30-year fixed rate was 6.52%, the highest since mid-2008.

“You could have applied for a mortgage two weeks ago, but now the cost is significantly higher, so it won’t be affordable and people will walk away,” explained Liebman. increase.

Expensive mortgages and house prices have pushed “many people” out of society. home buying marketthe broker will elaborate further.

“Also, I think there are a lot of fun places to buy, like Vegas, Orlando, Montana, but some of them aren’t that fun anymore because they’re getting more expensive,” Liebman said. “And disposable income isn’t what it used to be because inflation is happening everywhere.”

Real estate experts say that as home sellers have more properties to compete with, people will try to lower asking prices to attract buyers’ attention and win offers.

“This is a national market that has seen incredible price increases during the pandemic,” Liebman said, “making it a double whammy of high prices and expensive mortgages.” I have to give you something.”

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Although Liebman expressed that she did not believe The US is experiencing a housing recessionshe advised that those active in the market should “plan a surprise.”

“We want more people to be able to buy new homes, and there’s a whole new generation that’s getting ready to enter the market. So I think housing will be fine.” Like I said, it could be a little more balanced,” said the CEO of Corcoran Group. “You should really talk to someone who can advise you financially if rising interest rates will put you under financial pressure.”

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Elizabeth Pritchett of FOX Business contributed to this report.

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