Broker: “Scary” mortgage rates and sticker shock force homebuyers out of contracts

One real estate broker warns potential buyers that pending deals are more likely to be canceled than they were one year ago, with the 30-year fixed rate mortgage rate increasing by a third.

These numbers are a bit scary. This is something you would not have expected because most people wouldn’t be able to cancel a contract.” Pamela Liebman, president and CEO of Corcoran Group, spoke Wednesday on “Mornings With Maria”. “Nobody would offer you a mortgage contingency while the market was on fire, and it was just going up, upward, upward.”

The broker said that sellers now want to close deals and are offering contingencies.

Redfin’s report found that states in the Sun Belt experienced the highest rate of contract

cancellations, as mortgage rates continue to rise to multi-year highs every week. Liebman says that many homebuyers are reluctant to buy again after experiencing the shock of mortgage sticker shock.

Over the past six weeks, mortgage rates rose more than one percentage point. The 30-year fixed rate for 30-years was 6.52% at the end of week 23 on Sept. 23, which is the highest level since mid-2008.

Liebman stated, “You might have applied for a mortgage two or three weeks ago but now the cost is substantially higher and it makes it unaffordable. People will walk away.”

The broker explained that high-priced mortgages and rising home prices have “taken a lot of people out of the home-buying marketplace”.

Liebman stated, “I also think that a lot of the fun places to purchase, whether it be in Vegas, Orlando, or Montana, some are not as fun anymore because it has gotten more expensive.” Because of inflation, disposable income isn’t what it used to be.

The real estate expert stated that now that there are more home sellers to choose from, buyers will be more willing to pay less for their homes.

Liebman stated, “This market in the country saw incredible price increases during a pandemic. It’s a double whammy: expensive mortgages and high prices.” “So something has to give.”

Liebman said that she does not believe there is a housing recession in the United States, but she encouraged those who are active in the market to “plan for unexpected events.”

“We want more people to be able to purchase new homes. We have a whole new generation that is getting ready to enter this market. According to the Corcoran Group CEO, housing will be fine and, as Chairman Powell stated, maybe a little more balanced.” You just need to speak to someone who can financially advise you on whether an increase in the rate will crush you financially.

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