As mortgage rates rise, homeownership becomes increasingly out of reach for people who can’t afford a home loan or don’t qualify for one. That cuts demand for housing.
Higher mortgage rates also impact the supply side of the market. Would-be sellers sitting pretty with an ultra-low rate don’t want to trade their current loan for one with a rate that’s twice as high with their next home. So they decide to stay put. That’s one less home on the housing market.
The 30-year fixed-rate mortgage is averaging about 7% this week, according to Freddie Mac. A year ago, the 30-year fixed rate stood at 3.1%.
Many would-be buyers can no longer afford the higher monthly mortgage payments that higher rates bring. And prospective sellers have less incentive to give up their current deal.
Against that difficult backdrop, New Western, a buyer and seller of distressed single-family homes, is expanding. The Irving-based company, with $12 billion in revenue, buys homes across the country to sell to local rehabbers — primarily investors that fix and sell or fix and rent out the houses. New Western offers a real estate investment marketplace that helps investors find the homes to rehab. Its platform is one of the largest private sources of value-added investment properties in the nation.
Undeterred by higher interest rates and a cooling housing market, the privately held company is hiring 100 people a month as part of an ongoing expansion push, New Western co-founder and president Kurt Carlton said in an interview with the Dallas Business Journal.