By Kenneth R. Gosselin
In May, sales of single-family houses and the corresponding median sale price — where half the sales are above and half below — both rose for the first time since January. The sales were the highest recorded for the month since 2010, especially notable because sales in 2010 were boosted by a federal home buyer tax credit.
The sudden jump could temporarily stall recovery, mortgage lenders say, as borrowers wrestle with the implications of higher rates.
“When something goes up that much, it is too much, too soon,” said Michael Menatian, president of Sanborn Mortgage in West Hartford. “It’s like sticker shock.”
The difference between 3.6 percent and 4.8 percent on a $200,000 mortgage amounts to $140 a month, an increase from $909 to $1,049. (The payment represents principal and interest but doesn’t include escrow for real estate taxes or homeowner insurance.)
Higher rates have already cut into refinancing, and borrowers with adjustable-rate mortgages also will feel the pinch, experts say.
Home builders in Connecticut say they are watching the rate increases closely, as new home construction in the state begins to reverse a multiyear slump. Permits for new single-family houses, condominiums and apartment units are up 14 percent through the first five months of this year, compared with the same period last year.
“It’s always a concern when rates go up,” said Joanne Carroll, a spokeswoman for the Home Builders Association of Connecticut. “For every percentage point or part of a percentage point, you have the possibility of disqualifying people who are on the edge, like first-time home buyers.”
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