As mortgage rates rise, homebuyers still face competitive market in Conn.

There’s a new challenge in the already crazy housing market in Connecticut. Buyers are now facing some of the highest mortgage rates in decades.

“There are a lot of consumers who are worried about interest rates being on the rise,” said Alyssa Caliendo, Bay Equity Home Loans branch supervisor.

The average rate on the popular 30-year fixed mortgage hit 7.48%. That’s the highest level since 2000, according to Mortgage News Daily.

“There's actually still many, many people who are purchasing right now. Really, they're just looking to get the most competitive rate available to them,” Caliendo said.

For someone buying a $400,000 home with 20% down, they’re now going to pay roughly $420 more a month now compared to a year ago when the rate was 5.5.

Driving up the rates are investors’ concerns high-interest rates and inflation will last longer than expected. Here in Connecticut, there are still more people looking to buy than homes for sale.

“So in a situation where interest rates go up, what simply happens is that buyers, as well as sellers, reset their expectations. They determine how much their buying power is now may have come down from where it was a year ago,” CT Realtors President David Gallitto said.

Some homeowners – who locked in a lower rate a while ago – are reluctant to sell. And now buyers might want to consider different programs and grants.

“There's a lot of stories out there. There's a lot of different misconceptions. The biggest thing we tell, you know, first-time buyers especially is to do your homework, align yourself with a great realtor that has a lot of resources, different lenders,” Bill Arzt, Greater Hartford Association of Realtors president, said.

Lenders are hopeful rates could drop in a meaningful way next year and in 2025, but waiting until then brings up new challenges.

“When rates come down, we're going to see more buyers flood the market, which is going to drive prices for homes up even more,” Caliendo said.

Lenders say part of the conversation with buyers is still being in the game now and thinking about refinancing in the future.