As if inflation wasn’t enough, rising mortgage rates have effectively ground home sales to a big stop. A bit like a big rig slamming on the brakes to the point of creating burnt rubber smoke everywhere, home selling has turned into a trickle in the Denver market. And for those who are still interested, what’s left in supply is driving competition hard for available units. While experts are hoping for a decrease in rates in the first half of 2024, the change isn’t going to suddenly rejuvenate Denver markets to a healthy stream of new inventory. A combination of seller fear, inflation, and high prices are making it near impossible for the average homebuyer to get into the market.
Watching Benchmarks
The 30-year fixed loans have for decades been the benchmark on the home lending market’s health, and currently that same financing category is averaging from 7.2 to over 7.3 percent interest. That’s up from what was already considered high versus the last few years, being 6.7 percent in 2022. 15-year mortgage loan rates are slightly better at 6.72 percent, but this assumes a higher monthly payment from the buyer, something not every new consumer can afford. In short, the mortgage market is back where it was in 2000, more than two decades earlier, and combined with inflation, consumers are giving up. Sellers aren’t very interested in letting go either, worried as well about their chances to get into a replacement home afterward. Instead, everyone is hunkering down and doing nothing to wait it out, leaving the homebuying market to go south without activity or advantages.
Rising Rates Can be Avoided
One of the key advantages that buyers have available to them is the help of a mortgage broker. The typical consumer simply goes to visible banks to ask for a home loan. While this is technically an avenue for a mortgage, local banks pay clear attention to each other and tend to keep rate competition very tight. That doesn’t produce much variation in rate differences. Instead, with a mortgage broker like Rob’s Loans, a consumer gains access to a much wider market of lenders, many of whom can compete with rates that are very different from Denver-specific lender markets. The difference can be multiple points less in interest rates for eligible borrowers. But it takes a mortgage broker to find and access these lenders and match them up with a prospective borrower.
