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Mortgage Rates Highest Since 2014 – And Houston Realtors Are Noticing

Danielle Hale

HOUSTON – (By Michelle Leigh Smith for Realty News Report) – Mortgage rates have hit their highest point since 2014, posing some questions for a real estate market where rising home prices are a hurdle for many buyers.

Freddie Mac reported the 30-year fixed-rate mortgage averaged 4.47 percent for the week ending April 19.  A year ago at this time, the 30-year mortgage averaged 3.97 percent.

“Rates are now at their highest level since early 2014,” said California-based Danielle Hale, chief economist for “Rate increases are expected for much of 2018, with the 30-year fixed rate mortgage expected to approach 5 percent by the end of the year. These increasing rates will serve as an added challenge to home shoppers in what is already, perhaps, the toughest home buying market in recorded history.”

“I am seeing it slowly impact the market now – as rates move up sellers are less likely to sell and they will stay in their homes, which brings less inventory,” says Iris Hale, a loan officer and mortgage advisor with Homebridge Financial Services in Houston. “With less inventory that equates to higher priced homes as a result buyers will seek lower priced and smaller homes in order to qualify.”

Houston’s average home price was $292,756 in March, up 3 percent from March of last year, according to the Houston Association of Realtors.

“There’s a big difference between 3.75 per cent and 4.5 percent and upwards,” says Trey Wolff, a senior loan officer with Certainty Home Loans in Houston. “Depending on the program on a $200,000 loan, the difference may be $150 a month for a family – that is $1,800 a year. I wish it would stop. During a heightened market, 30-year interest rates were upwards of 5.85 percent. Now you have a new influx of millennials who are buying. I do believe we’ll be in the 5s by the end of the year.”

Rates went as low as 3.35 in 2012, according to Freddie Mac. The high-water mark was more than 18 percent in 1981.

“Although rates are highest since 2014, they are still relatively low,” says Trish Figueroa with eXp Realty in Houston. “Can you believe that in June of 2000 rates were at 8.54 percent? All our records show that 5 percent could be reached by the end of the year as well.”

The nation’s average 15-year fixed-rate mortgage was 3.94 percent last week.

“I hope interest rates don’t rise too quickly,” says Cheryl Israel, Realtor, CNE, *5 Star Ratings, Keller Williams Memorial. “Buyers and sellers need time to adjust and it will put a drag on home prices.”

“If the buyers start seeing the rates go up higher there may be a rush to a make a decision sooner but if they start seeing them rise above 6 percent expect to see their search slow down,” says Neal Hamil, president of Carnan Properties. “At this point in time, there isn’t any proof that they are rushing into the market but complacency after the threat of higher interest rates have given way to a sense of security that they won’t rise. It remains to be seen if this will impact the market. Once a shift happens it typically takes several months to see that reflected in Houston home sales.”

Houston home sales were slightly softer in March, but some say the dip has nothing to do with mortgages.

“I am not seeing interest rates negatively influencing the market,” says Charles Goforth, a Realtor with Heritage. Currently, if anything, I think the rise and indications of additional increases is driving some of the fence sitters to act. The volatility of the financial markets, as well as the lack of home inventory seems to be a bigger influence on the area housing market. As far as how high rates will have to go before buyers start to pause, it’s truly a numbers game. I think ultimately, many will be forced to adjust expectations to their budget.”

The uptick in rates can prompt the fence-sitter buyers to move ahead with their home purchases.

“I have not seen any impact from rising interest rates so far,” said Roger Martin of Roger Martin Properties who recently sold the most expensive home to date in the city of West University Place. “But sometimes rising rates can actually boost a real estate market, as buyers try to lock in those lower rates. It can be counter-intuitive.”

How high is too high? How high will rates have to go before Houston’s robust housing market goes into a decline?

“8 percent,” says retired rancher/banker Jerry Ritcheson of Houston.

April 22, 2018 Realty News Report Copyright 2018


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