The average rate on a 30-year fixed mortgage rose to 6.7% as of September 29th, 2022. The highest since July 2007. The week before rates were at 6.3%. This has been a result of a combo of the Federal Reserve Raising interest rates by another .75% and the 10 year treasury yield which has risen to 4% from being at 3.5% two weeks earlier.
With rates rising so quickly it's an easy option to continue renting with the fear this brings. However, more renters will likely increase competition for rentals through the rest of 2022. The buyers that do step into the game to make a purchase will have little competition for the property they desire. This will allow for more negotiation directly to the seller.
Negotiation options with the seller could be a lower purchase price, seller concessions towards fixing inspection items, or even to buy down to a lower rate. The buyers closing on properties this October will be in a good position for an expected interest rate decrease in spring/summer 2023. This is when you will be able to refinance and many mortgage lenders expect rates to lower at this time to help get out of the recession.
High rates have caused sellers to adjust what price they are willing to accept to get the property sold. There have been $10,000-$20,000 price drops on most properties after sitting on market for several weeks. This market correction will continue for the rest of 2022. Meaning several months to get real estate at lower prices before interest rates lower to create a balanced market.
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