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Interest rate increases affect Twin Cities homebuyers
As the Federal Reserve continues to raise interest rates to combat inflation, many in the Twin Cities are getting priced out of large loans for homes.
(FOX 9) - First time homebuyer Ivey Robinson has been searching for a new place to call home since January, with the help of her realtor Kyesha Williams of Coldwell Banker – Plymouth.
"It’s been really crazy, we’ve been looking for about five months, so it’s been a little hard, we’ve been outbid at least seven times," Williams told FOX 9 on Wednesday.
Down the stretch, Williams says homes were selling in just two or three days, with bids coming in anywhere from $10,000 to $60,000 over the asking price. But despite everything, this week Robinson has finally found a place to call her own. She’s moving into a townhome near downtown Minneapolis and the University of Minnesota.
"And so I feel like ultimately I won," Robinson said. But only after clearing one final hurdle.
"When she did purchase this particular home, we found out that she couldn’t afford exactly what she was originally preapproved for initially," Williams said.
"So it was really disheartening," Robinson said.
On Wednesday, the Federal Reserve raised its benchmark interest rate by a half percentage. That is the most aggressive increase in more than two decades, all in an effort to fight against the worst inflation in four decades.
"It’s just evening out the market, it’s not something to be really alerted about," Williams said. "People are kind of going crazy over it right now, but to be fair, it’s what it was prior to COVID-19."
Still, the move has effects on those looking to buy a home, "it brought my buying power down," Robinson said.
Already pre-approved to buy the townhome, suddenly Robinson had to return to the seller and renegotiate for a lower price.
"It was a really hard decision because they could’ve said no and then I would’ve lost the home," she said.
Ultimately, the seller was understanding, "we’re able to move forward and close tomorrow so it all worked out," Williams said.
"I’m happy, I’m so excited, I feel blessed," Robinson said.