Experts: Rising mortgage rates won’t cool hot housing market, but could impact buyer behavior (2024)

According to Freddie Mac, 30-year-mortgage interest rates now stand at 5.23%.

However, real estate experts and bankers don’t think that will force down record high prices.

What it might do instead: Change buyer behavior.

“The low rates that we had during the pandemic for two years was unprecedented,” said Rusty Rasmussen, Central Pacific Bank home loans division senior vice president.

“We thought it would rise more slowly. We knew it was going to come up, but not this fast.”

A rapid rise: Especially considering that it was back in April that 30-year-rates moved above 5% for the first time in a decade.

This as Hawaii’s median single-family home price stands at $1.15 million.

Despite the record numbers, demand remains and Realtors don’t expect potential buyers to walk away.

Instead, they’ll re-assess.

“The guy who was looking for an $850,000 purchase, at today’s rate just from January to today, now he’s looking at a $750,000 house, which may mean a different neighborhood, which may mean something smaller,” said Honolulu Board of Realtors president Chad Takesue.

And the numbers show more people are downsizing their purchases. Last month, single family home sales saw a 15% drop, but condo closings went up 15%.

For those worried about entering the housing market, banking and real estate insiders encourage long-term thinking for prospective buyers.

“There’s a number of other factors involved,” Rasmussen explained.

“They may be renting now and their rent is gonna be going more than this increased rate to mortgage payments, but you’re setting your rate for 30 years and think long term. I think that’s a good way to look at it.”