'Marry the house, date the rate,' Rising interest rates keeping home buyers and sellers on sidelines
BRAINTREE -- Rising interest rates are forcing some potential home buyers and sellers to stay put even when they are in desperate need of a change.
"It was fulfilling what we need, but at this point, since we had the baby, I think we are growing out of it," Shauna Ata, a new mother and homeowner in Braintree, told WBZ-TV. "We refinanced during COVID, and have a 2.75% interest rate, which we probably won't see in our lifetime again, so we have a hard time with, 'Do we give up this house?"
The halt to buy and sell is adding to a lack of overall inventory in the housing market. Local real estate agents expected this spring to be better than the last in terms of inventory, but now they tell WBZ it is more of the same.
They believe the issues are twofold. Some homeowners are nervous to sell their home in case they can't find another. Other homeowners refinanced to low interest rates during the pandemic and with rates more than double what they were, the added costs are hard handle.
"Right now, we were quoted in the mid-6s for a new interest rate, which could add $1,400 to $1,500 a month to our payment, just in interest," explained Ata.
"People are going to have to really weigh the pros and cons of whether they have outgrown their home so much that it is worth taking a risk buying a house at this current rate," Nicole Vermillion, a real estate agent with Lamacchia Realty, told WBZ. "There has been that quote going around for a while now (saying), 'Marry the house, date the rate."
What Vermillion is referring to is buy a home now if you can afford it, but then refinance it later when rates are more favorable.
"Rents are going up so much that I do think that is causing some people to investigate buying a home, which is adding to the buyer pool causing more people to fight over the same house," adds Vermillion.
She has also seen some potential homebuyers decide to add additions to their current homes instead of upgrading to a larger home.
"In order to do the interest rate, and do the construction, you would have to have the money outside of your mortgage. We couldn't do a construction loan because that would change your rate," Ata said. "At this point, it's how much cash do you have that you're able to put into an addition without touching your mortgage?"