The latest Redfin Real-Time Homebuyer Survey found that rising interest rates are as much a concern for those looking to purchase a house as the lack of inventory is and it could keep them from going forward. That has to be a big worry for originators because conventional wisdom is that purchase business is going to be the majority of production for the foreseeable future.
According to the survey, 63% of respondents indicated that rising mortgage interest rates are making it harder for them to afford a home.
Meanwhile there were contradictory results when it came to a question about rising rates affecting the speed of the buying process. A majority of respondents said rising mortgage rates caused them to alter the pace of their home search, with 33% speeding up their search, 20% slowing it down and 1% halting their search efforts.
"Our survey results underscore buyer sensitivity to this summer's mortgage rate fluctuations," said Redfin economist Ellen Haberle. "Should interest rates spike again in the coming months in response to a tapering by the Federal Reserve of asset purchases, we could see a significant drawback or even a temporary freeze in buyer activity."
Originators need to look at this data and develop a strategy based on what the potential buyers in their market are doing.
If buyers are speeding up their search, you need to show them you are ready to process their application quickly. For those slowing down, you need to reassure them that right now is the time to buy a home.
The scary part is if Haberle’s freeze prediction comes true; originators must adjust their business plan to account for this possibility.