What do these statistics mean? The dramatic increase activity is due in my opinion to the tightening of mortgage rules, increase in interest rates and seasonal factors. The mortgage rules are to take effect on April 19. Buyers must qualify as if taking out a mortgage with a 5 year fixed rate, no matter what terms they agree to with their lenders; many have already adopted these rules. Mortgage rates were raised at the beginning of last week, this caused a flurry of activity that I would anticipate lasting for a few months at most. Buyers with pre approved mortgages and locked in rates will be looking to buy before their rate guarantees expire, forcing them to use the new higher rates. The rate increase will hit buyers in two ways; firstly the monthly payments will be more therefore over the long term will cost more to pay the mortgage. Secondly if qualifying under the new rates, typically the amount for which they would be granted a mortgage for would be lower as the interest costs on the mortgage would be higher. How does this effect homeowners looking to sell. As the amount for which Buyers are approved decreases the number of buyers able to afford a specific property decreases therefore, competition decreases, lengthening the time it takes to sell and the possibility of receiving an offer at or above asking price. How does it look for the long term? In my opinion the market will flatten, homes will take longer to sell, but I don't see any appreciable price decrease in our future. |