This article examines the current state of mortgage rates and the incentives they provide for homeowners to stay put in their current homes. The article cites recent data from the Mortgage Bankers Association which reveals that the average contract rate for a 30 year fixed-rate mortgage has risen from 3.1% in August 2020 to 3.61% in December 2020. This has implications for housing inventory as some homeowners may opt not to move and instead, choose to refinance their current mortgage at a lower rate.

The article examines how this can benefit the homeowner but can also have a detrimental effect on the housing market. If homeowners are content with the current rate and are not tempted to move, then it can mean fewer homes for purchase, leading to higher prices for those that are available. Additionally, even if a homeowner does decide to move, their current home may be harder to sell, leading to a slower or less successful process.

In terms of the effects this can have on different parts of the market, it’s important to note that the rising mortgage rates are not the only factor contributing to a restricted housing market, as there are other issues such as low inventory and tight credit leading to potential buyers being locked out. Nonetheless, those with access to capital and a strong credit profile, can benefit from the high interest rates, if they opt to stay put and refinance.

Overall, this article illustrates that high mortgage rates can be both an advantage and a disadvantage depending on a homeowner’s individual circumstances and the current state of the housing market. By understanding what’s driving mortgage rates and considering how it can affect buyers and sellers, homeowners can determine the best decision for themselves.

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