Bottom line, do not let rising rates scare your home buyers and sellers away. In fact, rising rates may actually help many of your clients.
Rising interest rates generally coincide with an improving economy. When the economy improves, home values appreciate more quickly, investments grow at a faster clip, and employment numbers rise. This help builds confidence in the eyes of the consumer, which encourages people to consider larger scale purposes. When people have more money to spend, they tend to buy homes.
Real estate investors typically want the biggest bang for their buck. As rates rise, buying power decrease. For example, if rates would move from 4% to 5%, someone initially qualified for a $250,000 home can now only qualify for a $200,000 home. Rising rates create a sense of urgency and encourage the attitude of “I better get in now before rates rise too much.” This sense of urgency will help you generate more prospects.
It’s no secret that we all love referrals and repeat business. Do you ever worry that the home you just sold will be the last home you sell to a particular client? When the rates are low, people are less likely to leave their home. When rates rise, homeowners are more focused on their specific housing needs rather than their LOW interest rate. Do not suffer from the “Last-Time Buyer” Syndrome – rising rates can help create a customer for life.
When rates go up, Lenders need to bring the needle back to center. This is something that needs to happen as we learn from our mistakes and slowly expand the credit box again. Just over the past three months, the USDA reduced the Guarantee Fee, non-traditional credit guidelines have been eased, and confirming loan limits increased. These are just a few of the changes that have been announced. This will help you qualify more buyers and offset any negative impact rising interest rates may have.
As rates rise, it is more important than ever to get your clients a fully underwritten pre-approval. We call this our Buyer Advantage. This not only gets the financing process out of the way upfront and helps you know what the buyer can afford, but also strengthens your offer to a perspective seller.
About FM Lending.
FM Lending Services is a full service mortgage banker specializing in residential purchase and refinance loans in North Carolina since 1992. FM Lending Services offers a wide range of mortgage products and is consistently awarded the highest rankings by the North Carolina Housing Finance Agency and USDA. We have built a strong reputation in the Carolina’s for service, on time closings and professionalism. We pride ourselves on serving the lending needs of real estate professionals and their clients and many of our originators consistently rank in the TOP 1% of Mortgage Originators in the country*. It’s our mission to create an extraordinary customer experience through the efforts of our knowledgeable and caring mortgage professionals where relationships are valued and the focus is on treating every client with white glove service. We’ll work closely with you throughout the financing process, helping provide valuable information so you can make informed decisions.
FM Lending Services (Prosperity Home Mortgage, LLC dba FM Lending Services), *Ranked by Loan Originator Magazine