Prospective homebuyers are asking themselves, “Will rates come down?” Inflation has pushed rates higher, and some buyers are giving up hope. Rachel Wolfe and Imani Moise report in The Wall Street Journal:
Prospective home buyers are giving up hope that interest rates will come down soon. They are changing their life plans accordingly.
An engaged couple that had sold stocks to fund a down payment now expects to rent for another five years. A family that was looking to trade up is considering building an extra room instead. An investor plowing ahead on a purchase is scaling back his profit projections.
Persistent hope of lower rates and therefore lower monthly mortgage payments has consistently failed to bear out. It wasn’t helped on Wednesday after a government report showed stubbornly high inflation, dashing hopes that rates were about to trend lower. Many prospective buyers, already facing high housing prices and a shortage of homes, are now planning to sit out.
When Annie and Tyler Dartt moved into their three-bedroom rental with their three children in 2021, their plan was to only stay a year. Each time their Ashville, Ohio, lease has come up for renewal, however, they determined that they still can’t afford to buy.
Her sister Courtney Johnson lives down the street and is stuck in a home she bought in 2014. After spending quarantine in the 1,800-square-foot house and having a third baby, she and her husband, Brandon Johnson, were motivated to find a new place. The cost deterred them. Instead, they refinished their basement to make enough space for now.
“We thought the situation would have improved by now,” says Annie Dartt, a 30-year-old nurse. “Interest rates were predicted to go down, but they haven’t.”
Action Line: Read that last line again, “Interest rates were predicted to go down, but they haven’t.” That’s why Your Survival Guy stays out of the predictions business. You don’t want to base any of your future plans on someone’s predictions. If you are worried about higher inflation and what it will do to your mortgage rate, make offsetting investments that will benefit during inflationary periods. And when you want to talk about inflation and your portfolio, I’m here. In the meantime, click here to subscribe to my free monthly Survive & Thrive letter.
