Rising mortgage rates spur first-time homebuyer activity in November

Rising interest rates spurred first-time homebuyer activity in November, according to the Campbell/Inside Mortgage Finance monthly survey released Monday. The survey gets input from more than 3,000 real estate agents nationwide on the state of homebuyer activity. The share of first-time homebuyer purchases jumped to 37.2% from 34.4% in October, as near record low rates drifted higher over the course of the month. Freddie Mac most recently reported mortgage rates for a 30-year fixed mortgage at 4.83%. Zillow Mortgage Marketplace reported the rate for a 30-year FRM as low as 4.07% in early November. “The recent surge in interest rates has made potential homebuyers nervous,” said Thomas Popik, director of the survey. “If rates go up much more, then a good percentage of them will no longer qualify for the properties they want. As a result, they’re making bids on homes and quickly closing before their rate locks expire.” Popik noted that fewer current homeowners made home purchases in November because many need to sell their current residence before buying a new one. Current homeowner purchase activity dropped to 42.9% from 44.2% month-over-month, according to the survey. Investor activity in the home purchase space continued a two-month decline, down to 19.9% in November from 21.4% in October. Investor activity hit a 15-month high in September at 22.3% market share. The survey reported that the surge in home buying did not affect sales of all properties equally. Home shoppers often bypassed short sales in November, according to agents nationwide, spooked by the recent foreclosure mess. Popik said this trend is causing more investors to hold on to their properties and lease them out, rather than flip them, out of fear the property value will decline. Write to Christine Ricciardi.