Mike Smith, senior vice president at Homebank, said rates continue to jump due to inflation.

“Rates go up when the government, when the feds are trying to control inflation,” Smith explained. “Inflation is as high now as it’s been in years. So, the theory behind controlling inflation is if the feds raise interest rates, that’ll slow things down. And it’s all about supply and demand. If you slow things down by raising interest rates, then that will control inflation.”

These 7% interest rates are alarming for first time homebuyers, but Smith says it’s really nothing new, and he suggests they may be here to stay.

“A young person has only known lower rates, so these current rates are quite a shock for them. For older people like myself, who are 60, I remember when it was common to have a rate at 7 and 8%, Smith said. “A year ago, people were kind of shocked that rates have went up, but now after a year, in talking with people, it’s like they’ve realized this is the new norm.

“Now, will rates ever go down? In the future? You know, we have cycles, I don’t know, in my lifetime, if we’ll ever see him back down to 2%.

That interest rate hike has also impacted buying power.

“For example, a $200,000 loan at 3%, your payment’s $843 a month, over 30 years. That same $200,000 loan, it’s 7%, your payment is $1,330 a month. So that’s $487 a month more almost $500 a month difference. So these rates greatly affect your buying power and what you can afford,” Smith explained.

Misty Dowling, designated managing managing broker at Gem City Real Estate Group said between low inventory and fluctuating rates it’s been challenging for first time buyers.

“We’ve had people who were pre-approved for lets say $100,000, and these rates going up and down affected that buyer. The lender called and said ‘Hey, they can’t buy right now because the interest rate went up and affected their buying power,’ which is horrible,” Dowling said.

The high interest rate isn’t only impacting first time home owners, it’s also making current homeowners not want to sell because they locked in a lower rate over COVID.

“I was able to take advantage of these low rates, and I’m locked in at 2.5%,” Smith said. “I’ve had in the back of my mind, my wife, and we lived in our house for 20 years, we thought about possibly moving just for change, but you know what, I’m locked in at 2 1/2% right now. If I sell my house and move, I’m gonna have to pay 7%. So how they’ve affected the mindset of somebody older, who has a good rate locked in, I’m maybe less apt to make the move.”

With the current market both Smith and Dowling agree it’s never a bad time to buy a house.

“Even though rates are higher, it’s still a great thing, to own a house and be a homeowner,” Smith said. “Yes, rates are a little bit higher, but when you buy a house, you’re investing in yourself, you’re investing in your property, you’re gaining equity,” Smith said.

Dowling is seeing an influx of first time homebuyers due to a rise in rent.

“Renting right now the average in Quincy is $900,” Dowling said. “When you figure out a mortgage you can either pay somebody else’s mortgage or pay your own, and people are starting to figure out I want to pay my own.”

When working with first time hom owners, Dowling said it takes on average 30-45 days to find a dream home, which is average even before rising mortgage rates.

“Everyone keeps asking, are you busy? I’m extremely busy. That’s not stopping,” Dowling said. “People are still marrying the house and the interest rate will change later, they’ll divorce the interest rate and refinance. We’re still telling people don’t wait, if you find the perfect house get it and later on refinance.”

Taylor Flint and Andrew McCulloch said waiting to find the perfect house was agonizing. It took them three to four months to find the perfect home.

The couple is getting married in September and needed to find a home before the big day. Flint’s rental contract was coming to an end and McCulloch was saving money by living with his parents.

“I had started saving for a house years ago,” McCulloch said. “I didn’t know in what capacity I’d get a house. This was before I met Taylor. However, we’re excited that we achieved our goal of getting a house, a home can raise a family in is really rewarding.” 

They looked at dozens houses, but it wasn’t what they were looking for and even made offers on one of them, but it didn’t go through.

“I think for me it was discouraging. We’d go see a house, I’d go in with high hopes and they wouldn’t meet our expectations.” Flint said.

Luckily, they were able to find the perfect home.

“There wasn’t a perfect house on the market and the house we got came up not long after we made an offer on another house that fell through,” McCulloch said.

The couple offered advice for first time buyers, be patient.

“Be patient and don’t settle,” Flint said. “It took us time to find exactly what fit for us.”

“Be informed and stay informed about what you’re getting into,” McCulloch said. “Do research about houses, know the market, talk to your realtor and the banker. Be patient, but if you know the house and you think the house is perfect for you, don’t hesitate because the market right now doesn’t allow for it.”

For those who are looking to buy Dowling said real estate agents are vital. 

“If you’re working with a Realtor they work for you and they work for you and they network. So, we talk to other realtors and find out what’s coming soon and we can match you to a house, because that’s what we do we matchmake.”

While Smith suggest that staying local for your mortgage needs.

‘There’s great local banks in town here, the advantages of doing loans with a local bank is if I do a loan for you today, you can walk in my office five days a week, and talk to me face to face, we’re going to take care of you,” Smith said. “And traditionally, if you deal with a local bank, whether it’s Homebank, or any other bank in town, our closing costs are traditionally lower than if you’re dealing with an Internet bank or a big bank. And most people like to know their banker and deal locally anyway.”