Rising mortgage rates prompted more first-time home buyers to purchase homes last month.
That was one of the conclusions of the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.
While mortgage rates began increasing from record lows in early November the first-time home buyer share of home purchases surged from 34.4 percent in October to 37.2 percent last month.
“The recent surge in interest rates has made potential home buyers nervous,” said Thomas Popik, director of the HousingPulse survey. “If rates go up much more, then a good percentage of them will no longer qualify for the properties they want. As a result, they’re making bids on homes and quickly closing before their rate locks expire.”
“First-time buyers are back looking at homes,” said a real estate agent in Oregon who commented in the survey. Resources for first-time home buyers.
“Interest rates have helped spur recent activity,” said a real estate agent in Colorado.
Although mortgage rates have increased their record lows this summer, they’re still at historically low levels. Check current mortgage rates.
The survey also found that the proportion of current homeowners purchasing homes fell in November, from 44.2 percent in October to 42.9 percent last month. Current homeowners often have a harder time closing on a home purchase rapidly because they often have to sell their current residence to buy a new home, Popik said.
Not all types of home sales increased. Home buyers avoided short sales, which need many months to obtain approval from the current homeowner’s mortgage servicer. Home buyers were unwilling to wait five or six months for a response from the mortgage servicer and risk seeing mortgage rates increase.
Investor Interest in Distressed PropertiesFalls
The study also found that investors became less interested in distressed properties last month.
Investor activity fell from 21.4 percent for home purchases in October to 19.9 percent in November. The investor share of home purchases peaked at 22.3 percent in September, a 15-month high.
Investors are worried that home prices will fall further in 2011 due to the large inventory of distressed properties, Popik said. The earlier flipping strategy of renovating a property and selling it immediately is becoming increasingly difficult. Instead, more investors must rent their properties and the buy and hold strategy is becoming more common.
The survey of over 3,000 real estate agents was jointly done by Campbell Communications, a communications firm in Washington, DC, and Inside Mortgage Finance, a newsletter specializing in the housing finance industry.
