Even though average rates for fixed mortgages decreased this week, they remained near their highest level in two years. Locally, that means buyers might not be able to spend as much on a home, one local Realtor said.
"Buyers are having to get a bit more realistic in what they can actually get," Brandi Pearl Thompson, broker associate with Keller Williams Realty in downtown Chattanooga, said.
The increased rates might mean a buyer will spend $150,000 on a home instead of $175,000, she said.
According to The Associated Press, leaders with mortgage buyer Freddie Mac said Thursday that the average rate on a 30-year loan decreased to 4.51 percent.
Last week, it was at 4.58 percent, which was the highest since July 2011.
Earlier this month, leaders with Bankrate.com reported that Tennessee mortgage rates jumped 11 ranks from 2012, landing at the 20th-highest closing costs this year, according to Nooga.com archives.
This year, Tennessee's average closing cost is $2,437, which includes $1,806 in lenders' origination fees and $631 in third-party costs.
Thompson also said that as mortgage rates rise homes may not sell as fast, and it may also make buyers seek out other selling points, such as good school districts.
If they are going to be paying higher mortgage interest rates, they might try to forgo private school costs and get a home near a good school, she said.
The Associated Press also reported that rates have risen more than a full percentage point since May, when the chairman of the Federal Reserve first said that leaders could begin slowing asset purchases by the end of the year and stop completely by the middle of 2014.
The asset purchase program rate has held steady at $85 billion a month, and that has kept interest rates at historic lows of between 0 and .25 percent, according to Nooga.com archives.
Last week, Mark Blazek, president of the Greater Chattanooga Association of Realtors, said that the Fed hasn't indicated a change in monetary policy based on the moderate economic boost.
"Although the unemployment rate remains a factor to watch, the housing recovery continues to plug along, helping the greater economy with flourishing activity in sales and prices," he said in a prepared statement. "Housing has made a positive contribution to real GDP growth for 11 consecutive quarters."
And Thompson said that Chattanooga's housing market remains in solid shape. She said she's been getting calls from people in areas such as Mexico and New York who want to relocate here.
"You're seeing a huge influx into our area because of the affordability factor," she said.
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