DES MOINES, Iowa — Experts in the Des Moines metro housing market said homebuyers will start to see a shift away from what the market has looked like the past two years.
This follows the announcement from the Federal Reserve last week increasing interest rates.
David Bell, vice president of Gershman Mortgage in Clive, said the increase in the interest rate is going to eliminate some homebuyers from the market.
The mortgage lender said the reason this will happen is because rates have a huge impact on mortgages.
The average 30-year fixed rate on a mortgage has jumped from 4.45% to just over 6.11% in the past few months, according to Mortgage News Daily.
Bell said increases like that will mostly impact people who are trying to break into the market for the first time.
"We're going to see people that may have just been able to qualify before, when we had those low-interest rates, they may not be able to qualify now," Bell said.
The mortgage lender said this will keep potential buyers in the rental market longer while they wait for interest rates to cool down.
But he added this interest rate hike could be good to help cool the housing market down and regulate prices.
Lance Hanson, a real estate agent and past president of Des Moines Area Realtors, said though interest rate prices are high, buyers still have a way to get into their dream homes: an adjustable-rate mortgage.
With an adjustable-rate mortgage, Hanson said homebuyers could get a lower interest rate on their mortgage for a set period of time.
After that period is over, he said the interest rate can increase on the balance of the house monthly or yearly.
"You have to look at your long-term plan, where are you at in market place, is this 'your forever house,'" Hanson said. "If it is, then you're going to have to refinance."
Hanson said refinancing after the lower interest period is over will help the interest rate from potentially ballooning to a point the homeowner can not afford.
He also said if a buyer wants to get an adjustable-rate mortgage, it's important for them to understand what they are getting into and make sure to ask their lender a lot of questions.