Fewer people applying for mortgages as rates climb

GREEN BAY (NBC 26) — A recent increase in mortgage rates is causing some prospective home buyers to rethink their plans, according to a local lender.

With mortgage rates rising about a percentage point earlier this month, some first-time buyers are delaying purchases, while others are adjusting their expectations about what they can afford.

Tanya Sushkova, owner and loan officer at Cornerstone Mortgage in Green Bay, said the higher rates, combined with the traditional slowdown that comes with the fall homebuying season, have led to fewer mortgage applications and refinancing inquiries.

Sushkova said many first-time buyers are shopping in the $250,000 to $300,000 price range, but even a seemingly small increase in interest rates can significantly affect monthly payments and long-term affordability.

"It's huge. It adds up," Sushkova said. "On a year, you're looking at $2,400 more that a buyer has to pay for the same amount of mortgage they would have in the summer compared to right now. So, it adds up definitely."

The impact is not limited to first-time buyers.

Sushkova said many homeowners who had considered upgrading to a new home or refinancing their current mortgage are choosing to stay put for now, waiting to see whether rates decline in the future.

She noted that while refinancing activity has slowed overall, some homeowners are still exploring the option to consolidate higher-interest debt or finance home improvement projects. So, people are still filling out loan applications.

Sushkova said buyers shouldn't focus solely on interest rates and should instead determine whether a home fits comfortably within their budget. She added that rates can change over time, and borrowers may have opportunities to refinance in the future.

For those preparing to buy, Sushkova recommends talking with a lender early in the process. She said some conventional loan programs allow qualified buyers to purchase a home with as little as 3% down, and other low down payment options may also be available.

While higher-priced homes are spending more time on the market, Sushkova said today's housing market is very different from the housing crash of 2008, noting that homeowners have continued to build equity and home values have remained relatively stable. Sushkova says in 2008, most properties in the Green Bay area lost about 10% of its value.

As the market heads into the slower winter months, Sushkova expects mortgage activity to remain quieter through the end of the year before picking up again in the spring.