Will Rising Mortgage Rates Cool The Local Housing Market?
BOSTON (CBS) – Like the price of just about everything, the price to finance a home is going up.
"It has a lot to do with inflation," said IND Mortgage founder Dick Lee. "Inflation is the mortgage rates' worst enemy."
In turn, it's driving up the cost for those in the market for a new home.
The mortgage rate for a 30-year fixed home loan topped 5% this week, up from 2.65% this time last year. These costs, Lee says, stack up quickly.
"On average, it's at least $400-to-$500 difference. Monthly, yeah, when you think of the average home sale price in Boston," he said.
It's not ideal for those looking to buy, but Boston College Economics Professor Bob Murphy believes this could lead to a much-needed cool down in this competitive real estate market.
"If it does cool the market a bit and provides a little more sanity to the home purchase process, I think it could be a good thing for some homebuyers who want to take their time and have the resources now to pay a bit higher interest rate," said Murphy.
One realtor told WBZ-TV that time will tell whether higher interest rates will impact people's willingness to buy, but she's not seeing that quite yet.
Nicole Vermillion, of LaMacchia Realty, said, "I do believe some buyers have had to adjust their purchase price due to the rise in interest rates, but the market is still hot."