U.S. mortgage rates recently hit a new high for the year (so far), as inflation fears continue to creep up. The average rate on the 30-year fixed mortgage hovered between 7.4% and 7.5% this week, according to Mortgage News Daily’s daily data — its highest daily level since last November.
For Drew and Jonathan Scott of HGTV’s new series “Backed by the Bros” — also known as the Property Brothers — that means homeowners and property investors need to get creative. Asked what interest rates above 7% mean for the real estate industry, Drew Scott quipped, “A lot of crying.”
“That’s what’s happening,” Drew Scott said in a joint interview with his brother Jonathan for the latest installment of the Quartz video series “What’s Next for…?”
“Anybody who’s looking to, you know, refi, or anybody who’s looking to pull equity out of their home, it’s a tough time because you’re not getting what you wanted with the high rates,” Drew Scott said. “Granted, it looks like things are coming down a little bit, but this has been forcing people to try and find other ways to create more opportunity to get access to money, like converting a garage into an ADU, having a renter in there. A lot of people are becoming landlords for the first time in their lives.”
Jonathan Scott said that “there’s still a huge opportunity for people if they’re looking to invest.”
“They’re looking to, you know, pull a little bit of money out,” Jonathan Scott said. “Seven percent is not bad. It’s not great, but it’s not bad. But it is sort of at that tipping point where you want to be a little more cautious with what you’re putting your money toward and how much money, how much leveraging you’re doing. And so that’s what we say. There’s opportunity to do well. There’s opportunity to make money in real estate. You just have to be careful.”
Watch the full interview above.