Mortgage rates have been steadily rising since the beginning of the year. With that in mind, here are five things for you, as an agent, to do in a rising rate environment.
It seems mortgage rates will continue to creep up, slowing down the housing market, which can present a problem for home buyers and sellers along with you as their agents. Since we cannot control the rise of the rates, it is important to remember that there are a few things you can control in order to keep your clients happy and your sales from dropping.
1. Have perspective. While we did just have one of the biggest hikes in the mortgage rate in history, remember the historic average is almost 8%, so all things considered, rates are still low overall. It’s also important to note that the housing market is currently still going strong overall despite the hike in rates.
2. Learn to pivot. Be able to talk to sellers and buyers about the market. Even in changing markets, spot the wins. Remember part of being a licensed agent is being able to stick it out during any unforeseen market conditions. For example: with rising rates there may be less buyers for your client to compete with, decreasing the chances of a bidding war.
3. Speak to your buyers’ lender. With rising rates comes issues for buyers with qualifying. Buyers may find that the max amount they can try and get approved for has gone down as interest rates have gone up affecting what they could budget for monthly. Help your client understand their options, for example, they could buy discount points to help lower their mortgage interest rate or use a shorter-term loan. Have them work with the lender to think outside the box.
4. Set realistic expectations for buyers. Keep buyers educated and informed on what is happening. The rising rates are expected to further increase throughout the year. If a buyer is determined, it could be better to lock in a rate now before the rates increase more and could put them further out of budget.
5. Keep potential sellers informed on how the competition is affected. As buyers budgets limit the areas of the market they can afford, the buyer competition will decrease, potentially impacting sellers negatively. For those sellers that do not have the option to hold on to their home and list it later, they may need to reduce the price in order to attract the right buyer. For those that have the ability to not sell right now, they can weigh their options of selling at a potentially reduced price, or holding on to their property for a while knowing the interest rates could increase further keeping them from selling for a certain price for a while.
In addition to these five points, it is also a good idea to continually check in on changing interest rates and what is to come in order to stay as informed as possible for your clients. Many of them will not be as in-the-know on the current market environment, and will value the help of their realtor.