Inflation hike hurting potential homeowners
HUNTSVILLE, Ala. (WAFF) - On Wednesday the US Federal Reserve raised key interest rates by three-quarters of a point. This is the fifth time the Feds raised the interest rate this year bringing it to levels not seen since 2008.
Higher rates mean higher consumer costs on loans, the loan most people have are mortgages.
President of Lawhorn & Associates Calvin Lawhorn says the average monthly mortgage payment in Huntsville is around $500 more expensive than before.
“We have seen a drop off in people applying for mortgages because of the increase in rates,” Lawhorn said. “It’s probably dropped off around close to 30-40%.”
Lawhorn says that because of the increase more people are preferring rental properties rather than applying for a mortgage.
“They are having to prioritize some of the things that they’re having to do to qualify for the mortgage,” Lawhorn said. “It is a higher interest rate which, of course, means a higher monthly payment so they’re having to budge.”
Realtor and President of Huntsville Area Association of Realtors, Isaac Winkles, says that although loans may cost more as mortgage rates increase, people still have the option to buy a lower-priced home.
“Right now the market is kind of taking a breath cause we’ve had such price appreciation over the last 12-18 months,” Winkles said. “All the economics and all the meetings I’m in are forecastings, even though with the increase in interest rates again take off of pricing a greater appreciation of the value of home values here in the north Alabama area.”
The average home in Huntsville is nearly $300,000 and the current interest rate is 5.75 percent.
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