Rising mortgage interest rates create homebuyer struggles
RAPID CITY, S.D. – Mortgage interest rates are at their highest level since 2009, with no relief in sight. As inflation and interest rates continue to rise homebuyers struggle with increased borrowing costs.
According to Bankrate, the rate for a benchmark 30-year mortgage is 5.623% on Friday, May 27th. In contrast, the average rate was 2.94% a year ago.
When mortgage interest rates increase, a mortgage generally costs homebuyers more.
“Depending on what price point you’re looking at, you could see where a half percent change in rate could affect your payment anywhere from 50 to 75 bucks a month,” said Amber Rasmussen, CMG Financial Loan Officer. “I feel like rates are pretty stable right now. They’re still at a low. I bought my first house at seven and a quarter and they’re lower than that. So I feel like it’s still a good time to buy a house, it’s a great investment for anybody’s future..”
During the pandemic, the U.S. government fought hard to avoid a financial fallout by boosting the economy with stimulus checks and financial support measures. However, this sent inflation out of control creating the worst inflation in 40 years. The Federal Reserve has since raised interest rates to fight inflation and has signaled further interest rate hikes in the future.
Higher mortgage rates often discourage borrowing and home purchases, which in most markets causes housing prices to lower. But that is not the case for the Rapid City housing market, which is scrambling to keep up with the current housing demand.
“When I bought my first house, I did not get given the information that I think is needed for a first-time homebuyer. Even with people who have owned homes before, I can share with them different things that they have never known about home buying,” said Rasmussen. “I think is really important for someone to know how everything breaks down when they make such a big purchase, the benefits to making extra towards principal and to really have that total wealth knowledge of homeownership,” said Rasmussen.
While prices may be higher than normal in the Rapid City market homebuyers can still qualify just as easy.
Watch Rasmussen’s edited interview to find out what she believes homebuyers should know in the current Rapid City housing market.