Interest rates impact buyers, sellers - although rates are rising, they’re still at historic lows

 

HONOLULU ADVERTISER , May 21 2006

BY LISA SCONTRAS

Custom Publishing Group

 

If you’re one of those people waiting for the right time to buy or sell real estate, be forewarned that the right time is now. According to Marie Imanaka, president at Wells Fargo Home Mortgage of Hawaii LLC, interest rates are likely to be heading up soon.

 

“Interest rates are difficult to predict,” she says. “However Wells Fargo is expecting inflation fears and further Fed hikes to move bond yields higher. That equates to 6.7 percent for a 30-year fixed-rate mortgage, which our economists are forecasting to occur in July 2006.” Imanaka suggests that, following this anticipated increase from the current rate of 6.5 percent, rates are likely to remain stable through January 2007.

 

Because interest rates have a direct effect on the monthly mortgage payment, an increase or decrease can make a difference in how much money a person can borrow — a significant difference. But Scott Higashi, executive vice president of sales at Prudential Locations LLC, reminds sellers that it’s not just the buyers affected by a change in the rates.

 

“If interest rates go up, there will be fewer buyers out there shopping,” he says. “So that means fewer people looking at your property. Rates affect sellers, too.”

Higashi explains that because the strength of a market is defined by the number of buyers — more buyers equates to more activity. And interest rates affect the number of buyers.

 

“When there are lots of buyers, there are lots of sales,” he says. “Today’s interest rate environment is still extremely favorable. So if you’re thinking of selling, it’s still a terrific marketplace.” With interest rates in general, Higashi reminds people to keep it in perspective.

 

“Have rates been lower? Sure,” he says. “But if you look at interest rates charted over the years, you’ll see that they are still historically low. It was-n’t too long ago — in the 1980s — that rates went over 18 percent. That’s three times what they are today.” Imanaka suggests the Hawaii Homeownership Center as a good resource for first-time homebuy-ers seeking help with getting started. She also recommends consulting with a loan officer to find out what steps they need take to become homeowners.

 

“Homeownership is one of the keys to building financial wealth,” she says. “And lenders have broadened the loan choices available to make home-ownership a reality.”

 

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