Rising interest rates have been a hot topic in the news lately. In September of 2022, the Federal Reserve increased its benchmark interest rate by .75 percentage points, marking the third time it has had such a significant increase since June, according to NPR. The increase wasn’t unexpected, as August reports showed annual inflation had increased by 8.3% for the year, and raising rates is one way the Federal Reserve works to reduce inflationary growth.
As the benchmark interest rates inch up, there’s a lot of speculation about what this will mean for various markets, investors, and borrowers, including how it could impact the new construction market. Danny Marshall, who has been a mortgage broker for over 12 years and in the real estate industry as a real estate agent for the last six years, shares his outlook in an exclusive interview with House Digest. If you’re thinking about building a home, here’s what to keep in mind.
The new construction market is dependent on access to affordable financing, and changing interest rates impact not just the cost but the availability of spending. “When rates are low, there is more money available for lending,” says Marshall, adding, “This means that builders can more easily get the financing they need to start new projects.” That’s the way the market has been for some time, benefiting from significantly lower interest rates. However, market conditions are changing.
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