Question
How does the recent rise in Mortgage Rates Affect Selling Prices?
Bloomberg.com/Bankrate.com are reporting the latest average for 30-year fixed at 5.74, a whopping nearly 20 basis point increase just today (Wednesday 6/10). I locked in last week just after the original Black Wednesday in May. I'm happy with the rate and payment. Now my concern turns to the house prices. I've read that in this kind of market, if mortgage rates go up higher in the short term, prices will have to come down. Is this true? And if so, how does this affect the appraised value of the home? The reason I'm asking is that I have an approved VA loan and they are required to appraise the house and so the loan funds are limited to the appraised value. There's a contingency in my contract that allows me to recover everything deposited should the value come in lower. If this happens, is it common for the buyer (if its a builder) to come down to the appraised value or for the seller to exercise their right to walk away and recover the deposited funds?
6 months ago - 1 answers
Best Answer
Chosen by Asker
This is the reason why the bailout won't work. You are right about the housing prices dropping. Any rise in additional expense of purchasing a home will hinder buyers from entering the market. The sale price of homes will fall to adjust to the higher expense. With the lower sale price, appraisers will need to use the lower prices to compare value of new sales. Thus reducing the number of new sales. Then the banks will suffer again and guess what ? We will bail them out again to restart the cycle. If the value comes in under the sale price you will need to renegotiate the contract.
by clay
6 months ago
Asker's Rating: 