Real Estate Investment and Rising Mortgage Interest Rates
How Will Mortgage Interest Rates Affect Your Real Estate Investment Business?
Mortgage rates have hit a recent high, as compared to an all time low during the last 6 years, and are expected to keep moving upward. Since the early days of May, with a brief exception last week, interest rates have been steadily rising, peaking at 3.93% last week, according to data from Freddie Mac. Projections see an average that will hang out around 4% on a 30 year fixed mortgage during the later half of 2013, climbing steadily to reach up close to around 5% by the end of 2014.
So why does it matter to real estate investors, who traditionally use leverage for short intervals, quickly flipping properties and, if smart, not allowing themselves to get caught up in interest -heavy, debt holding positions?
In a word: resale.
Real estate wholesalers would be foolhardy to lose sight of the fact that both retail borrowers and buy and hold investors could be affected without the right tools in place to help find private money lenders and cash buyers.
And, with access to private moneylenders and cash buyers, smart investors may actually see a few advantages in this turn of events. The rising rates are bound to be a catalyst to get buyers moving now, eyes turned toward a continuing surge in rates, but also buyers may be more likely to continue to spurn traditional lenders in favor of the flexibility offered by private lenders.
Of more interest to buyers than interest rates, though, is the housing supply or lack thereof. Mortgage rates may be rising just a bit, but housing prices are getting out of range for many buyers because of lack of inventory. “Those are much bigger concerns than whether or which side of 4% mortgage rates are sitting at,” said Greg McBride, senior mortgage analyst at Bankrate.com.
The good news for those real estate investment professionals who are rightly dialed in, though, is access to Find Motivated Sellers Now, the latest in success tools for real estate investors.
The big take away here is this:
Awareness of market trends, plus having the right tools in place, enables you to take advantage of buyer behaviors that are motivated by market conditions. With these two advantages in your pocket, your real estate investment business can’t help but benefit.