Things are changing. Mortgage and real estate professionals understand what's on the horizon, but the public may not fully grasp the shift that's been a long time coming until they experience it firsthand. Mortgage interest rates surged to their highest point since April 2014 as of February 15 according to Freddie Mac. But survey results posted by Seattle-based database and brokerage Redfin show that's not deterring the majority of prospective buyers. In the event of a rate jump above 5%, respondents said they would…
- Halt their home search - 6%
- Slow plans to buy - 27%
- Not alter their plans - 25%
- Speed up home purchase - 21%
- Adjust expectations to smaller home/more affordable area - 21%
Enthusiasm is still high for homeownership among people who say they're in the market, but many don't realize that their decision to accelerate, slow or halt their home purchase may not be theirs to make - interest rates will dictate their options. Additionally, a February 20 article in the National Association of Realtors' (NAR) Realtor Mag titled, “Your Buyers Don’t Grasp Mortgage Basics” describes a knowledge gap that agents and their lending partners must address early in the lead cycle.
Education-based marketing can help loan officers and Realtors prepare consumers to save them time and frustration. Low inventory and steadily climbing prices have been challenging for some time; but a marked increase in the cost to borrow money will make the path to homeownership more difficult for many. Automated campaigns and consistent outreach that explains the process and importance of pre-approval, getting in financial position to buy over time and other relevant information will help establish you as a trusted advisor and prepare consumers to weather a new market era.