Home Buying in Phoenix>Question Details

Katherine J.…, Real Estate Pro in Scottsdale, AZ

How will rising mortgage rates affect the first time home buyer?

Asked by Katherine J. Higgins, Scottsdale, AZ Sun Jun 23, 2013

Help the community by answering this question:


I personally think that rising mortgage rates will not stop first time home buyers buying a home. If we look in the history interest rates were very high in the past, and people were still buying! My only concern is the criteria banks/lenders will use to qualify buyers, they are currently way too strict!
0 votes Thank Flag Link Tue Jun 25, 2013
The real effect will be a limiting on the maximium home loan amounts. The short term perceived effect will likely be a hesitation on moving forward in either denial of this rapid shift in rates or in hopes that this rise will reverse.

In related news, recently all agencies have scaled back on maximium debt to income ratios. Meaning with out a rate increase the max possible house payment has been reduced for all. And looming changes in the industry from a piece of the 2009 Dodd/Frank law will go ineffect at the end of this year and restrict home loans further. Meaning borrowers will qualify for less again.

The cards are not stacked well for the borrower in 2013/2014.

Dave Jackson
Real Estate Asset Planner
Financing Solutions for Arizona Real Estate since 1993
American Financial Lending, Inc.
20860 N. Tatum Blvd, Suite 160
Phoenix, AZ 85050-4277
602 277-3800 w
602 631-9788 f
602 524-2401 c
602 912-9438 h
davej@aflhomeloans.com http://www.aflhomeloans.com
BK # 0910057 NMLS LO ID # 284875
0 votes Thank Flag Link Sun Jun 23, 2013
Hi Katherine,

I created a cost of waiting mortgage calculator that shows how much more it cost to purchase a home as mortgage interest rates increase. Please click on the link below to download a copy of this calculator to determine if now is a good time for you to buy a home:


I hope this answers your questions. Please let me know if you would like any further assistance with your home search.

Sean Heideman, Broker
Position Realty
Office: 480-213-5251
Fax: 866-232-2256
Web: http://www.PositionRealty.com
0 votes Thank Flag Link Sun Jun 23, 2013
The most common scenario I am seeing is first time home buyers getting priced out of the market. Each time interest rates go up the less a home buyer could qualify for. Basically if you have a higher interest rate your payment is going to be higher on the home than if it were less. The way they have to counter this issue is to buy a lower priced home.
0 votes Thank Flag Link Sun Jun 23, 2013
their max amt. of loan will be slightly less. raising interest rates should moderate home prices. The effect of small increases in rates should be very small, if at all.
0 votes Thank Flag Link Sun Jun 23, 2013
It won't affect them as long as they are realistic in buying within their means. FTHB indicates a buyer with low down payment. Rates shouldn't make that big of a differences when it comes to affordability vs renting.
0 votes Thank Flag Link Sun Jun 23, 2013
Actually investors in entry level homes (typically what a first time home buyers is interested in) in the Phoenix market have, for the most part, moved on to other markets or higher price points or other products like multi-family.
The entry level type homes have several interested buyers but they are all owner occupying types not investors.
Investors have helped the Phoenix market by improving the properties' curb appeal and upgrading the interior and placing people in these rental properties when the demand was high for rentals. As the values improve, some investors are selling those assets and owner occupants are moving back in to those neighborhoods. With some very tough times behind us I am looking forward to a better tomorrow for our children and grandchildren to enjoy.
0 votes Thank Flag Link Sun Jun 23, 2013
Rising interest rates will have a limited impact initially, but soon we will see more ARM type lending products come back to the market. That would be the only way to keep up with the house the first time home buyer needs and the what the market provides. Investors are causing the most pain for the first time home buyer as they jump on every home in particular price ranges.

Terry L Day - Realtor
First Premier Real Estate Group, LLC
16427 N. Scottsdale Rd, Suite 410
Scottsdale, AZ 85254
Web Reference: http://azsellmyhouse.com
0 votes Thank Flag Link Sun Jun 23, 2013
The mortgage interest rates have been historically low in recent times and increases have occurred and have been expected. Interest rates under 7% are still reasonable for long term financing of the largest investment individuals will make. Of course increasing interest rates reduces the maximum purchase price for a first time home buyer and/or requires a greater down payment. A 1% increase in interest rates requires approximately $100 increase per month in the monthly loan payment which is a cost of $1200 per year for every $100,000 of mortgage money.
The bottom line for any type of buyer in today's market is that now is the best time to purchase a home and so it is the best time in years to market your home for sale. given the present day demand.
0 votes Thank Flag Link Sun Jun 23, 2013
With 27 years experience, you may already know the answer to your question....hummmmm.
0 votes Thank Flag Link Sun Jun 23, 2013
Overall rates are still low but as they are increasing the number of buyers will decrease. If you are buying a home right now, the interest rate increases will raise your mortgage payment.
0 votes Thank Flag Link Sun Jun 23, 2013
Why First-Time Buyers; do you have a special F-T-Buyer program to help them?
Other than that, why should F-T-B be any different?
And who says rates are rising?
0 votes Thank Flag Link Sun Jun 23, 2013
My take is the fence dweller may jump off, otherwise rates are still very low historically.
0 votes Thank Flag Link Sun Jun 23, 2013
First-time home buyers may be able to afford less of a purchase price with the higher interest rates.

Some of them will probably start looking into Seller financing options.
Web Reference: http://www.steffyrealty.com
0 votes Thank Flag Link Sun Jun 23, 2013
Yep....buying power will simply suffer. Buyers will not be able to purchase as much home for their money.

Good timing with this post because the time to maximize may be vanishing before our eyes.

0 votes Thank Flag Link Sun Jun 23, 2013
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