Higher Rates May Shut Out Some Homebuyers

By Kyle Chezum Updated on 12/9/2010

12/09/2010

As mortgage rates increase, new home loans lose some of their value to lower income buyers.  While high rates are often a sign of market recovery, many potential buyers will continue sitting on the fence rather than leaping into the purchase pool.  Refinance applications have already dropped off significantly as more and more homeowners sense that they’ve missed the train.

The recent tax deal signed into effect by President Obama will likely push rates higher.  It remains to be seen whether home purchase applications will begin to slow as well, but chance are the market will see a decrease in demand.

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