BrokerageIndustry News

Real estate survival tips for interest-rate rollercoaster

Coasting smoothly through up-and-down mortgage rates

If you have never experienced a market where interest rates are climbing steadily, hold onto your hat--you may be in for a wild ride. October 2005 saw record national home sales numbers. Rather than being encouraged by this, many experts believe this surge is due to buyers purchasing prior to additional interest rate increases. With each interest rate increase, there is a reduction in the number of buyers who can afford to purchase property. The Federal Reserve is expected to continue to raise interest rates during 2006. Agents who have never done business in this type of market may be in for a rude awakening. Consider the following scenario: you represent a buyer who purchases a property and is pre-qualified for a 5.75 percent fixed rate loan. You "lock in the rate" (secure the rate for the 60 days while the property is under contract). The fixed rates jump up to 6.25 percent. Even though your buyer is pre-qualified, the lender keeps requiring additional documents before they can "g...