Another proposed round of interest rate hikes by the Federal Reserve later this month could add to an even more hectic time for home buyers and mortgage lenders.
Cambria Mortgage president and CEO John Schroeder says rising rates are creating issues throughout the industry.
“Many large mortgage companies have had some layoffs and a reduction of their employee base,” says Schroeder. “Income levels are not as high, sales are slow. I think you’re seeing it across the board in the housing market in general.”
Schroeder says more people are opting to forgo buying a home based solely on the fact their current interest rate is so low compared to today.
The expected three-quarter-points hike coming this month is a way for the Fed to choke-off rapid inflation. However, many are still sifting through last month’s hike by the Fed, especially home buyers and lenders.
The rising rates are having an immediate impact on the house buying market.
“It used to be houses flying off in a day or two,” Schroeder says about the market which has been red-hot the last year-plus. “A lot of people have decided to stay put. They have cheaper interest rates from the past. The newer rates have increased. The demand probably isn’t there.”
Schroeder adds it's important to act quickly when it comes to locking in an interest rate for home buyers.
According to RedFin Group, roughly 60,000 home-purchase agreements fell through in June, equal to just under 15% of homes that went under contract that month. They say the increase in interest rates in June pushed many buyers to cancel their purchases.
The Mortgage Bankers Association reported Wednesday that mortgage applications have declined 14% from last year and refinancing is down 80%.
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