Here are 5 things to do before mortgage rates rise any further

Mortgage rates have been steadily increasing since the beginning of the year. With that in mind, here are five things for you as an agent to do in a rising rate environment.

It looks like mortgage rates will continue to rise, slowing the housing market, which can pose a problem for home buyers and sellers as well as you as agents. Since we can’t control rising prices, it’s important to remember that there are some things you can control in order to keep your customers happy and not cause your sales to plummet.

1. Step back. While we’ve just had one of the biggest mortgage rate hikes in history, remember that the historical average is almost 8%, so all things considered, rates are still low overall. It is also important to note that the housing market is currently still strong despite rising rates.

2. Learn to pivot. Being able to talk to sellers and buyers in the market. Even in changing markets, spot the gains. Remember part of being one authorized agent is to be able to hold its own in all unforeseen market conditions. For example: with rising prices, there may be fewer buyers for your client to compete with, reducing the chances of a bidding war.

3. Talk to the lender about your buyers. Rising rates cause problems for eligible buyers. Buyers may find that the maximum amount they can try to get approved for has decreased as interest rates have increased, affecting what they could budget for monthly. Help your client understand their options, for example, they could buy rebate points to help lower their mortgage interest rate or use a shorter term loan. Ask them to work with the lender to think outside the box.

4. Set realistic expectations for buyers. Keep buyers educated and informed of what’s going on. Rate hikes are expected to increase further throughout the year. If a buyer is determined, it might be best to lock in a rate now before rates rise further and put them further out of budget.

5. Keep potential sellers informed of how the competition is affected. As buyers’ budgets limit the areas of the market they can afford, competition from buyers will decrease, that can have a negative impact on sellers. For sellers who don’t have the option of keeping their home and listing it later, they may need to lower the price in order to attract the right buyer. For those who have the capacity not to sell right now, they can weigh their options of either selling at a potentially reduced price or keeping their property for a while knowing that interest rates could rise further, preventing them from sell at a certain price for some time.

In addition to these five points, it’s also a good idea to continually check on interest rate developments and what’s coming in order to stay as informed as possible for your clients. Many of them will not be as aware of the current market environment and will appreciate the assistance of their real estate agent.

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