Mortgage rates may be one of the biggest influencers over home sales, especially for first time home buyers. Current mortgage rates decide the amount of a homebuyer’s payments and the value of the home loan for which they can qualify. In Little Rock, Arkansas, the current average rate for a mortgage is somewhere between three and four percent, with a rate of 3.5-3.7 percent being the average.
In 2016, the mortgage rate conversation is centered around the Fed’s decision to raise interest rates. How will that increase affect the market? We will take a look at current mortgage rates available in Arkansas, and then discuss what rising mortgage rates could mean for the state’s economy in 2016.
What Are the Current Mortgage Rates Available in Arkansas?
Mortgage rates change seasonally, even daily, depending upon with which bank you choose to apply. However, the current snapshot of the Arkansas real-estate market can tell us a lot about what to expect in coming months, especially when compared to national averages. The national average for a 30-year fixed rate mortgage is currently 3.5 percent.
Bank of America is currently offering 30-year fixed mortgage rates of 3.8 percent APR. Of course, depending on your down payment and the purchase price of your desired home, the rate may vary. If you have a down payment worth 20 percent or more of the purchase price, you won’t have to pay for private mortgage insurance and you may qualify for lower interest rates. The more you put down, the lower your potential interest rate.
Table Rock Community Bank is offering a mortgage rate of 3.753 percent APR for a 30-year fixed mortgage. Again, this will vary based on your down payment, credit history, and the assessed value of the home in question.
Sebonic Financial is offering a fixed 30-year mortgage rate of 3.670 percent APR for the Little Rock area. This is one of the lowest rates currently available in Arkansas, probably because Sebonic Financial is purely an online lender, which cuts back on overhead costs. Your final interest rate will depend on the results of your online application process and background check.
Pulaski Bank is a locally sourced bank available in Little Rock, Arkansas. Pulaski Bank currently offers a 3.321 percent APR mortgage interest rate. However, that is a rate for their adjustable rate mortgage. For fixed mortgage rates, you have to contact the bank directly to speak with a mortgage loan officer.
Almost every bank in Arkansas has a home loan program. Because of federal regulations and the banks’ liability, truly specific rates are not available to the public, but have to be requested from the bank’s mortgage loan officer. In general though, the going mortgage rate for Arkansas seems to be about 3.6 percent APR.
What Are the Predictions for Arkansas Mortgage Rates in 2016?
In 2016 the federal government is expected to raise short-term interest rates by one percentage point by the end of the year. This will happen gradually, but it is expected to cause a rise in mortgage rates by about half a point. The national average is currently at 3.5 percent, so this will bring interest rates up to around 4.5 percent. It is important to note that this applies specifically to 30-year fixed rate mortgages. Adjustable rate mortgages and 15-year mortgage rates will vary based on the amount of down payment and the purchaser’s credit history.
Particularly for first time homebuyers, an increase in mortgage rates can be discouraging for residential sales. However, we predict that Arkansas will follow the nation’s trend of a slight increase in sales over 2015’s this coming year. When combined with the steadily improving labor market, it is expected that millions of new households will be formed. New households mean a growth in demand for purchased and rented homes. Rent is expected to rise steadily, which could push even more buyers into the housing market.
With rising demand, will come rising prices in 2016, which is great news for sellers. Many homeowners and sellers are still recovering from the 2008 crash, and those who have been holding onto their homes will likely see their property values rise and take the opportunity to sell. As more people put homes on the market, the pricing will need to become more competitive, and this is what will cap prices from rising high enough to outstrip demand.
Arkansas is almost exactly on par with national averages for mortgage interest rates. This correlation means that the housing market in Arkansas is not over-priced or under-stocked according to national average. This gives us good reason to believe that Arkansas mortgage rates will closely follow national trends and likely cap off at 4.5 percent by the end of 2016.
The unemployment rate in Arkansas is currently 4.8 percent, lower than the national average of 5.0 percent. Combine the state’s lower than average unemployment rate with it’s lower than average cost per living and median listing price, and slightly higher than average salary, and Arkansas’s housing market promises to be on the precipice of a modest boom. Highly sought after neighborhoods like Little Rock’s Hillcrest and The Heights are already feeling the results of high demand and rising property values, and the rest of the capitol city seems ready to follow their lead.
If you are considering moving to Arkansas, or purchasing real estate in the area, our advice is to move quickly. With interest rates on the rise, it is literally going to cost you more every day that you wait.
2 Point Highlight
We predict that Arkansas will follow the nation’s trend of a slight increase in sales over 2015’s this coming year. Combine the state’s lower than average unemployment rate with it’s lower than average cost per living and median listing price, and slightly higher than average salary, and Arkansas’s housing market promises to be on the precipice of a modest boom.
