Mortgage rates jump above 7 percent, putting another damper on Houston home sales

To try to lure buyers, more homebuilders in Houston are offering incentives on new homes and more sellers of existing homes are even experimenting with ways to reduce buyers’ upfront costs. Realtors say they are seeing some Houston home sellers offering to pay for financing options that reduces a buyer's mortgage rate for the first two years of the loan, said Jennifer Wauhob, Houston Association of Realtor Chair with Better Homes and Gardens Real Estate Gary Greene.

But regardless of those incentives, Wauhob and other realtors are encouraging buyers to look at the big picture historically. “I know the interest rates now are much higher now, but in the grand scheme of things, this is actually just a typical interest rate,” Wauhob said. “And there is definitely potential for rate to keep increasing.”Still, that’s a tough pill to swallow for buyers who remember seeing rates of about 3 percent just earlier this year. Nationally applications for new mortgages dropped by 0.1 percent this past week, while refinancing applications slid 4 percent, according to Washington D.C.

This latest jump in interest rates comes after the Federal Reserve raised its benchmark interest rate by three-quarters of a point last week as the central bank tries to pump the brakes on inflation. Although the Federal Reserve doesn’t set mortgage rates, its actions affect the mortgage market. Federal Reserve Chairman Jerome Powell has signaled he wants to slow down the pace of rate increases, but a lot will depend on whether the central bank can clamp down inflation.

The Labor Department Thursday reported inflation eased somewhat in October, although the consumer price index is still 7.7 percent higher than it was a year ago. That could motivate the Federal Reserve to raise interest rates again next month.

Source: Loan Digest (loandigest.net)

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