The Effects of Rising Mortgage Interest Rates in Seattle
By Joe Taylor Jr.Local Lender Columnist
May 23, 2006
With interest rates on the rise in the Seattle metropolitan area, homeowners have noticed an interesting side effect. Fewer new homes are being built so the prices of existing homes are rising. Though builders are nervous, mortgage holders can use this surprise appreciation to refinance before interest rates rise again.
Although rising mortgage interest rates have cooled new home construction throughout the country, Seattle is one of the few major cities in the country to continue to see double-digit growth in home value so far this year. Critics point out that average home prices of $400,000 to $600,000 still keep mortgages out of the reach of many Seattle residents. However, mortgage underwriters have used innovative new products like interest-only loans to lure buyers that might otherwise have stayed in the rental market.
Strong Seattle Businesses Help Keep Real Estate Prices High
Boosted by the continued growth of regional employers like Starbucks and Microsoft, the Seattle real estate market keeps climbing, while home values in many other cities have flattened or declined over the past six months. As large companies and smaller start-up operations attract new workers to Seattle, local mortgage lenders have worked hard to close deals before each interest rate hike.Long time Seattle residents benefit the most from the stall in the new housing market. Bargain hunting newcomers and a renewed appreciation for classic home construction has helped home prices soar. Homeowners that don't cash in on the sudden burst of equity use their newfound home value to finance improvements, renovations, and debt repayment. With interest rates still at relative lows, Seattle homeowners can save money on interest while reducing their monthly payments by taking advantage of attractive refinancing deals.
Sources:
Seattle Post-Intelligencer
Tacoma News Tribune
About the Author
Joe Taylor Jr. has covered business and finance news for Financial Times Television and CNBC. He coaches beginning mortgage brokers to provide better customer service and to understand creative financing opportunities.