Even small movements in rates can have a significant impact on home shoppers’ buying power, with buyers being able to make the same monthly payments on significantly more expensive homes when rates are low. Those rates have been low by historic standards and have helped fuel the pandemic’s housing boom. The recent rise in borrowing costs hasn’t done much to quelch the enthusiasm of homebuyers so far, but that could change if they get back to pre-pandemic levels, and if Redfin’s poll is any indication. In addition to the 10% who said they would cancel their homebuying plans outright, a further 17% would slow down their search to see if rates go back down again, while 15% would look in other areas or for a smaller home to keep their payments down. Yet, 14% would actually shop with increased urgency, to get while the getting is good. “The uptick in mortgage rates is likely fueling more bidding wars in the short term because house hunters are rushing to buy homes before rates rise even further,” Fairweather said in a commentary on Thursday. “If mortgage rates move significantly higher, we’ll likely see some buyers move to the sidelines, which will curb competition in the long run.”
