How Might an Uptick in Mortgage Rates Affect Housing?

For the first time since July 2020, mortgages rates have surpassed 3%, but that’s not likely enough to put an end to strong housing demand, says LGI Homes chairman and CEO Eric Lipar. At the same time, the Mortgage Bankers Association’s seasonally adjusted index showed total mortgage application volume remained virtually unchanged. The housing market’s strong demand has been greatly fueled by record-low mortgage rates, says CNBC. LGI Homes’ Lipar told CNBC that the rising mortgage rates could push buyers to move even quicker and to remember that the rates remain lower than this time last year.

Lipar, who has served as the homebuilder’s chief executive since 2009, said he thought the uptick in rates could in some ways accelerate purchases.

“Even though rates have increased a little bit, that ... also gives the buyers the urgency to go ahead and write a contract on a house because we’re seeing prices continue to go up and rates go up,” he explained.

Driving those prices higher has partly been the rise in lumber and labor costs because the demand environment has allowed LGI Homes to avoid absorbing them, Lipar said.

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