First-time homebuyer interest rates increase The South Dakota Housing Development Authority's Board of Commissioners announced May 6 that, for the first time in nearly three years, the First-time Homebuyer Program interest rates have increased.
"The markets are adjusting now to what is expected to be a large increase in interest rates in the future," said John Rothstein, of Mobridge and chairman of the authority's seven-member board. "Rate increases are never good news, but we are still three-quarters of a percent (.75 percent) to one and a quarter percent (1.25 percent) below conventional market rates."
SDHDA's First-time Homebuyer rates now stand at 5.25 percent for a 30-year Fixed-Rate mortgage and 4.25 percent for a Starting Step-Rate mortgage.
The Step Rate will increase one-half percent per year until it reaches 6.25 percent at the beginning of the fifth year, where it remains for the balance of the 30-year term. Even though the Federal Reserve has yet to increase short term interest rates, the market is already adjusting for a rise, whenever that may be. Conventional mortgage rates have risen five-eights percent (0.625 percent) over the past five weeks as reported by Freddie Mac.
SDHDA's recent homeownership mortgage bond issue also felt the impact of the markets, causing the slight increase in interest rates they can offer First-time Homebuyers.
The Federal Reserve is expected to raise interest rates sometime over the next few months to prevent inflation from threatening an accelerating economic recovery.
"The announcements this past week have given us indications that a larger increase may be in store for the summer months," said Dar Baum,. SDDA executive director. "WE have worked to keep our First-time Homebuyer rate as low as we possible can for as long as we possibly can. Even with the slight rise, now is the best time to buy your first home, before the possibility of additional rate increases."
Income limits and purchase price limits for the First-time Homebuyer Program vary by county. Refinancing existing mortgages is not permissible. For more information, First-time Homebuyers should contact their local lender.
SDHDA's bond program provides an ongoing source of lower-rate mortgage financing. SDHDA is a self-supporting, quasi-public agency, which receives no state general funds. The authority does not discriminate against any person because of race, color, creed, religion, sex, handicap, familial status or national origin.