What Fluctuating Interest Rates Mean for Franklin Home Buyers and Sellers in Franklin

When the Federal Reserve changes interest rates, it can have a dramatic impact on home sales – an outcome that should be carefully considered before making any major housing decisions. Home buyers are impacted directly and almost immediately, but sellers feel the effect too. And interest rates are indeed fluctuating. About two years ago, rates hit near historic lows, but that is now changing. We have seen several rate hikes causing interest rates to rise the fastest they have since the 1980s. With mortgage rates on the rise, buyers face an increasingly costly reality while sellers grapple with waning demand and must consider reducing prices in order to stay competitive. It’s a delicate balance of uncertain costs versus potential benefits. So let’s dig in and see what fluctuating interest rates mean for Franklin home buyers and sellers.

How Interest Rates Are Affecting Home Buyers in Tennessee

First, let’s take a look at fluctuating interest rates from a buyer’s perspective. Since rates are no longer low, we’ll examine how rising rates affect home buyers in Franklin.

As interest rates continue to climb, potential buyers are finding it increasingly difficult to make competitive offers on homes. With higher payments required due to rising rates, some purchasers may be unable to turn their dreams of homeownership into reality. The result is that buyers are forced to seek homes in a lower price range because they qualify for a lower mortgage loan amount.

When searching for a home, potential buyers must pass the pre-approval process first. This evaluation takes into account the size of the down payment and debt-to-income ratio (DTI). Unfortunately, higher interest rates lead to larger monthly mortgage payments that can make it difficult to qualify for loan amounts suitable enough to purchase more expensive homes – which are particularly scarce on the market right now.

The consensus among industry experts is that things aren’t going to improve for buyers at the lower end of the market. Inventory in the current market is still low, so sellers aren’t lowering prices as they would in a more balanced market.

Interest Rates Are Affecting TN Sellers

From a seller’s perspective, fluctuating, especially rising, interest rates actually have a fairly dramatic impact. This is compounded by the fact that many sellers are operating under some misconceptions.

Home prices have been rising for some time, and some sellers think this will continue to be the case. They think they will continue to get multiple offers even at or above their asking price. Many sellers are also still accepting offers only from preapproved buyers.

As interest rates continue to climb, it is vital for sellers to ensure that buyers’ preapprovals are based on up-to-date information in order to guarantee the most suitable financial situation. Sellers should also be prepared for the fact that fewer buyers will now have a preapproval letter in hand. They will also receive fewer offers, and it will take them longer to sell. The high times for sellers are coming to an end.

Many sellers today are looking to sell their current home and upgrade to a bigger, better home. They will find this more difficult now with rising rates and a lower sale price. The upshot is that they will find it more difficult to buy their next home.

Under these market conditions, most sellers can benefit immensely from working closely with an experienced Franklin agent. To consult a top agent and discover more, just call 615-543-5333.

How Property Values and Interest Rates Are Linked

Rising interest rates can also benefit home buyers and sellers in Franklin. Most of the time, property values are directly related to mortgage rates. But for this to play out properly, the larger economic conditions have to be right.

If, for example, the economy grows at a rapid rate, rising mortgage interest rates will not have the expected impact on housing prices and property values. But as long as the economy grows, along with job and wage growth, rising interest rates should not affect the housing market too adversely, and property values may increase.

Is Now The Time To Buy or Sell?

So should you buy and/or sell with interest rates on their current trajectory?

Don’t let rising mortgage rates deter you from buying or selling a property. Although 2022 and 2023 have seen elevated rates, it’s worth keeping in mind that interest levels have been historically low for some time – averaging only 10.19% as recently as 1986! Now may still be an ideal moment to invest and take advantage of the relatively manageable loan costs available today.

But with the current economic uncertainty and wildly fluctuating rate, buyers and sellers find that the services of a good agent are almost a necessity.

How A Good Middle Tennessee Agent Can Help

Rising interest rates can have a significant impact on the housing market, as buyers may find themselves opting for more affordable properties and sellers may need to lower their asking price. This could mean that those seeking or selling property could be in for an extended wait until getting the ideal deal. That’s why the services of an experienced Franklin agent are so critical at this juncture. So if you’re a Franklin home buyer or seller and are concerned about the impact of fluctuating interest rates, contact us today at 615-543-5333.

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