How to Talk About Mortgage Interest Rates with Prospective Home Buying Clients

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March 16, 2022 | By RGR Marketing Blog

Nurture Your Mortgage Prospects Better: Know How to Discuss Rates

Since the real estate crash of 2008, American home buyers have faced tighter credit standards, rising home prices, and a declining surplus of unsold homes. But on the other side of that coin, they also enjoyed the lowest mortgage interest rates this country has ever seen, which largely counterbalanced those challenges, at least for those fortunate to get approved for their home loans.

It’s been over a decade since that housing debacle and today’s 30-year fixed mortgage rates are still hovering between 3% and 4%, but an increase to 5% or even higher may soon be upon us. In fact, with the economy recovering strongly since the start of the Covid-19 pandemic and high inflation, higher interest rates are almost a given.

As a result, rising mortgage interest rates are going to be one of your clients’ most pressing fears this year. Knowing how to talk about mortgage interest rates with your prospective home buying clients will be essential for helping them overcome their fears and ease their anxieties. Here are some tips that can help you educate your clients about this issue.

How Will Rising Mortgage Interest Rates Affect Most Buyers?

Rising interest rates won’t prevent a prospect from qualifying for a home mortgage, but it can affect how much of a loan they might be able to qualify for. For example, if you have a client who wants a 30-year fixed mortgage on a home priced at $400,000 and they get approved for their loan with a 4% rate, then their monthly mortgage payment would be $1,900. But if interest rates rise to 5% and they want the same house at the same terms, then their monthly payment would rise to $2,138.

In this case, a 1% increase in mortgage interest raises the buyer's payment by $238, or roughly 13% and thereby reduce their purchasing power by $45,000. So, if the rate is 5%, to get into a new home that is within the buyer’s $1,900 a month budget, they would have to look for homes priced closer to $350,000.

Will Home Prices Drop to Counteract the Interest Rate Hike?

Under normal situations, when mortgage interest rates rise, home values tend to fall. But whether this happens is really based on how healthy the economy is. If the economy is growing fast enough, which it currently is, then property values and home selling prices usually aren’t affected. The reason for this is because a growing economy means employers can increase employee salaries, which for some buyers will help them compensate for the rising interest rates.

Currently, real estate experts are not predicting property values to drop any time soon, so this will be something your home buying prospects will need to keep in mind this year.

Is Now the Best Time to Buy?

There are two things that most real estate experts agree on – both mortgage interest rates and home values will continue to rise this year. As a result, the longer your clients wait to secure funding for their homes, the higher their interest rates will be when they finally commit. Depending on the client, this could result in them being forced to shop for a lower-priced home or it could even wind up forcing them out of the market entirely.

Stock Up on Quality Mortgage Leads with RGR Marketing

Regardless of what happens with interest rates and property values this year, the truth is any mortgage professional is still going to need a steady supply of quality mortgage leads to maintain growth in 2022. At RGR Marketing, we have more than 20 years of experience providing mortgage professionals with the high-quality leads that they need to improve their closing ratios.

Our leads have been scrubbed and verified for accuracy, and they can be seamlessly added to just about any lead management software. Plus, our leads are exclusive, so when you purchase mortgage leads from us, you can have confidence knowing that we aren’t sharing those leads with any other mortgage professional.

This year’s housing market will no doubt see its share of challenges. Having access to quality mortgage leads will help you overcome them. Contact RGR Marketing today and get the exclusive, highly targeted leads you need to grow your business this year.

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Nurture Your Mortgage Prospects Better: Know How to Discuss Rates

How Will Rising Mortgage Interest Rates Affect Most Buyers?

Will Home Prices Drop to Counteract the Interest Rate Hike?

Is Now the Best Time to Buy?

Stock Up on Quality Mortgage Leads with RGR Marketing

Start making more
money today!

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Nurture Your Mortgage Prospects Better: Know How to Discuss Rates

How Will Rising Mortgage Interest Rates Affect Most Buyers?

Will Home Prices Drop to Counteract the Interest Rate Hike?

Is Now the Best Time to Buy?

Stock Up on Quality Mortgage Leads with RGR Marketing

Start making more money today!

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