WICHITA, Kan. (KSNW) – The hunt for a new home is getting harder with mortgage rates now above 6%. That is nearly double where they were last year.
“It has been a dramatic increase in mortgage rates and one of the fastest increases that we’ve ever seen,” said Stan Longhofer, Director of the Center for Real Estate at Wichita State University.
If you are looking to buy a house, get ready to pay more.
“Based upon the average price of Wichita home around $220,000. It’s about an extra $250-$300 a month. So that’s a pretty substantial increase in payment for the exact same house,” said Steven Myers, Owner of Motto Mortgage Charged.
Mortgage rates have not been above 6% since 2008.
“If somebody had a $150,000 mortgage, that payment now has gone up 42% compared to it was a year ago,” Longhofer explained.
Real estate experts want to remind people that from a historical perspective 6% is not an unusual mortgage rate. Nevertheless, as rates increase, the buyer’s power goes down.
“Each 1% increase reduces the buying power down 11%. So basically, you know, like, let’s just say the average price is $220,00 going from 4 to 5% reduces their buying power down to $200,000,” Myers said.
To stay within affordable budgets some realtors are noticing buyers go back to old trends.
“A small cute little home but sometimes it needs TLC maybe need some fixing up. For a long time, those were homes that first-time homebuyers just weren’t interested in. We’re starting to see those first-time homebuyers go back into that traditional starter home,” Longhofer said.
Myers says there are some bright spots coming from the rising rates, “The market has softened a little bit for sellers. So, you know, we’re not seeing the $20-$30,000 over asking that we were seeing earlier this year.”