MINNEAPOLIS — It's getting harder to afford to finance a house. Mortgage rates increased by more than half a percentage point this week.
"There's a background level of dread," said first-time homebuyer Nick Johnson. "But I'm thankful my parents are letting me stay with them, not rent free, but rent low until I get something sorted out."
Minneapolis Area Realtors reports there are only about 18 single-family homes for sale in the city under $200,000. It's a popular price point for first-time home buyers who are being hit again with rising mortgage rates.
"I've never seen it like this before," said Denise Mazone, Minneapolis Area Realtors President.
Mazone says it's hard to finance a home amid rising inflation and Wednesday's largest interest rate hike by the federal reserve since 1994.
"If you're interested and truly trying to find a home, now is the time because I don't think it's going to get any better," Mazone said.
The average 30-year fixed rate is now about 5.78% — up from 5.23% just a week ago. It's the largest one-week jump since 1987.
This time last year it was at 2.93%.
Still, Mazone has faith and tells her clients three tips that starts with this: "We will find something eventually, just be patient."
Then, she recommends getting pre-approved again.
And lastly, build your own equity.
"Don't look at your forever home, look at just getting into a home," said Mazone. " Then you can just use it as investment eventually."
Most realtors agree that mortgage rates may keep going up.
But it's not all bad: Creating less demand could alleviate some of the supply crunch, effectively slowing how quickly home prices are growing, giving more buyers more options.
Watch more local news:
Watch the latest local news from the Twin Cities in our YouTube playlist: