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Most real estate agents are not concerned about mortgage rates rising from four to five percent in 2017, according to a survey of more than 800 agents conducted earlier this month by Redfin.
Nearly half of the survey’s of respondents said homebuyers will change their home search to look for cheaper homes if mortgage rates increase from four to five percent within the next year, while 19 percent said this type of a rate increase will have no effect on the market. Some agents felt a rate increase would impact supply rather than demand, with 16 percent of respondents stating prospective sellers locked into low mortgage rates would decide not to sell in order to hold onto their cheap mortgage. Another 16 percent said homebuying activity would decline dramatically.
Nonetheless, the prospect of rising rates and shrinking inventory is not souring prospective homeowners. When asked to choose one word that best described the general attitude of today’s homebuyers, 34 percent of agents said “hopeful,” which outranked other choices such
as “fatigued,” disappointed” and “rushed.”
“For some homeowners looking to move, it can be a wise decision to take advantage of the combination of rising rents and low mortgage rates by renting their current homes,” said Redfin Chief Economist Nela Richardson. “For this reason, we have a group of move-up buyers that are not making their starter homes available to the next generation of homebuyers, which is historically how more affordable inventory is added to the market. Unfortunately, this hits millennials the hardest. This is a double-whammy for the inventory crunch since not only are there fewer homes for sale but the ones that do get listed are mostly in a higher price range.”