Mortgage rates are rapidly increasing across the country and that’s affecting buyers on the Central Coast. Local economists say though the rates have also likely not reached their peak.
Today, it seems like the cost of just about everything is rising, from gas prices to groceries and even mortgage rates.
"We've had the fastest increase in mortgage rates we've ever seen," said Hal Sweasey, real estate broker for Keller Williams.
Cal Poly economist Daniel Seiver attributes the increase in mortgage rates to a hot job market, rising wages, the pandemic and the Russia-Ukraine conflict.
"So, mortgage rates will go higher and interest rates in the treasury market are going to go higher because the fed is tightening monetary policy and inflation is running still red hot," said Seiver.
Seiver says current mortgage rates are well above the 30-year rate.
"The red which is the mortgage rate is about two percentage points above the 30-year rate," said Seiver.
Seiver says whether the mortgage rates keep going up depends on what happens to the 30-year rate, and he predicts the 30 year rate has not finished rising.
"I could easily see over the next 6-9 months, that interest rate rising by say, three-quarters of a percent," said Seiver.
According to Seiver that could mean 30 year mortgages nationally go up to six percent.
The increase in mortgage rates is already affecting Central Coast homebuyers.
"You know if you were getting a loan for a million dollars back in February, now that loan is the equivalent of costing like $250,000 more," said Sweasey.
Sweasey says he's recently seen a bit of slow down from buyers in the San Luis Obispo area due to the increase in mortgage rates.
"It went from a frantic rate to more of a normal rate. We still have multiple offers depending on price range," said Sweasey.
Despite the rising mortgage rates the wait list continues to grow for San Luis Ranch, a new housing development in San Luis Obispo.
Josh Biven, the General Manager of San Luis Ranch, says at this time all homes within the community of San Luis Ranch have been sold or are under contract. There is a waiting list that continues to grow for both single and multi family neighborhoods.
Sign up for the San Luis Ranch community here.