Current mortgage rates nearing 7% are significantly affecting the housing market, discouraging home sales. Homeowners who secured mortgages below 3% are reluctant to sell, contributing to tight inventory. This shift is impacting affordability; for example, the monthly mortgage payment difference on a $450,000 home between these rates can be over $900. While homebuilders are exploring creative financing options, ongoing high rates may weaken demand, especially if the economy begins to slow down.
You don't have a big pool of sellers when you've got a bunch of people with 3 percent mortgages, because that's too much of a deal.
The cost difference between a 3% and 7% mortgage on a $450,000 home can exceed $900 per month, significantly impacting affordability.
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