The average rate on the 30-year fixed mortgage loan has hit five percent for the first time in eight years, and is expected to continue increasing, Mortgage News Daily reports.
Hitting five percent has added ramifications, says Matthew Graham, COO of Mortgage News Daily, "Five percent is definitely an emotional level inasmuch as it scares prospective buyers about how high rates may continue to go." CNBC says that consumers are focusing on job security and increasing their earnings as rates rise, and do still think now is a good time to buy, according to Fannie Mae's monthly sentiment survey.
"One of the best unforeseen benefits of higher rates is that it makes for less enticing cash flow for investors. That means first-time homebuyers who can actually find a house they can afford are now more likely to have an offer accepted whereas they ran a much bigger risk of losing out to an investor in the past five years," said Graham. "Even all-cash investors typically refinance shortly after buying the investment property, so they can put that cash to work buying additional properties."