Post-election rate hike starting to kill deals

by Ryan Smith22 Nov 2016
A sharp spike in mortgage rates in the wake of the presidential election is starting to scuttle sales, according to a CNBC report.

The average interest rate on 30-year fixed rate mortgages spiked to its highest level in more than a year Friday. Buyers who started looking for mortgages when rates were in the 3.5% range suddenly found themselves – in the space of a week – looking at 4.125% rates.

While buyers in a strong financial position can handle a rate spike that extreme, those closer to the lower limits of mortgage eligibility can find themselves out of a deal, CNBC reported. While mortgage rates are still historically low, a spike from the 3% range to the 4% range means many buyers won’t qualify because they suddenly have too great a debt-to-income ratio.

“It’s kind of sad because you’re helping out a first-time buyer who is in need of these low rates and doesn’t have the personal liquidity to offset if the rates rise,” one New York lender told CNBC.

The lender has two clients that have been impacted by the sudden rate spike. “One is on the bubble, but one is almost a dead deal.”

And with the Federal Reserve expected to hike the benchmark interest rate next month, mortgage rates could go even higher.

Have your customers been impacted by the rapid rate increase? Let us know your experiences – and how you’re helping clients – in the comments below.
 
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COMMENTS

  • by Long Island Agent | 11/22/2016 11:35:01 AM

    Buyer finally found their dream home (their first) on November 5th. The young couple revisited with Moms and Dads, and decision was made. Their offer was soon accepted. Home was inspected (and price was fine-tuned). Buyer's attorney received Contract on November 16th...and here we are. Presently the couple are mortgage-shopping with promises of 'beating the other guy's' rate...Monthly payments have increased more than $60 per month. Dad's are rethinking the whole thing; couple is heartbroken, and they're hoping for some sort of a "correction"...

  • by 25-yr Mortgage Vet | 11/22/2016 11:49:11 AM

    Hey, but look on the bright side, at least we won't have to deal with the big nasty CFPB, and TRID rules in the not to distant future, or will we?

  • by 31 Year Mortgage LO | 11/22/2016 12:04:19 PM

    Really folks? We knew rates couldn't stay that low forever....

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