Global Hubs Leading to Increased Housing Prices and Mortgage Rates for Florida Buyers

Gayle Kurtzer-Meyers

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Globalization and the Effects on Florida Mortgage Rates/Photo by Artem Beliaikin from Pexels

Globalization chatter

Globalization is the context used to describe the successful integration of economies worldwide to promote free trade and encourage high returns. Like the North American Free Trade, economic globalization aids the conjunction of the international market and promotes financial exchange. However, it also has its corresponding negative consequences, and one of such is the increase in mortgage rates. Florida is starting to feel the impact.

According to BankRate, the fixed rates for a 30-year and 15-year mortgage plan are 4.41% and 3.65%, respectively. The average fixed mortgage rate is 4.24% in Florida, above the national average of 4.18%.

"It has been said that arguing against globalization is like arguing against the laws of gravity." -Kofi Annan-

Compared to older interest rates, the ever-increasing rate is a stretch for many Florida residents. However, the present average mortgage rate is not stepping down soon based on several statistics and predictions from profound economists captured in The Mortgage Reports. The upward trajectory might continue for a long time.

"Get prepared and refinance now as rates are going up in 2022 and 2023." -KC Conway, Economics Advisor-

This recent activity in the economic market has forced several future homeowners in Florida to provide larger down payments that might help offset the increasing price. But unfortunately, the present jobs and current hourly wage cannot suffice the required down payments. So what does globalization mean to Florida real estate?

Effects of globalization on Florida mortgage rates

Mortgage rates play an essential role in purchasing a home as mortgage borrowers actively search for the lowest loan rates, while the lenders must mitigate financial risk through the kind of interest they charge.

Although the homeowner's credit score history plays a role in mortgage rates, economic and global factors are uncontrollable factors that also affect the current mortgage price in Florida.

Global hubs stimulate mortgage rates.

In recent times, Florida has continued to receive a high influx of investors and migrants, slowly turning to global hubs like New York and California. Hence, the price gaps between urban metropolis and rural areas widen considerably. Moreover, with Miami being an international city, recognized as one of the global telecommunication hubs, it has a high concentration of investors, increasing food, other non-consumable goods, services, and housing.

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Mortgage rates play an essential role in purchasing a home as mortgage borrowers actively search for the lowest loan rates./Photo by Rodnae-productions from Pexels.

Economists' view predicts the rise and fall of housing prove that mortgage rates depend on local factors like the average income of the working class of Florida. However, the impact of globalization on the global market has created a whole new paradigm.

For example, the concentration of investors in a region will attract global attention, leading to an increase in rental prices and mortgage rates. Although this coalition of investors offers immense benefits like employment, it will inadvertently lead to a rise in rental fees at the expense of the residents of Florida.

Globalization aids national regression.

Although fully integrated national markets promote culture sharing and free trade, it has several setbacks in which national ingression is one. One of the setbacks is the great recession and the financial crisis of 2007 that exposes the downside of strongly intertwined economies. This era exposes the not-so-positive effect of globalization and how economic instability is shared equally amongst the supposedly globalized countries.

During that era, financial debt was rising, leaving families and corporations stranded. As a result, many couldn't afford basic housing as interest climbed to a staggering 6%. Comparing the economic path of then to the present economy shows a similar trajectory that may replay without appropriate combat measures. Moreover, globalization reduces the ability of individual nations to effectively use monetary and fiscal policy to control the national economy.

Globalization migration not matching available homes in Florida

Florida is the perfect gateway for people and goods due to its infrastructure and proximity to Latin American countries and the Caribbean. It offers passage for European transshipment and Asian produce for neighboring Latin America and Caribbean countries. Also, the steady influx of visitors to our beaches and theme parks has contributed to the increase in migration.

With over 1000 yearly legal migrants and hundreds of unaccounted ones, Florida could overtake New York as one of the most populated states in the United States of America. Although the constant migration is commendable, it has its downside and has been a blessing and curse to the state of Florida and its residents.

Unfortunately, there is not enough housing available for the ever-brewing population. So, Florida is experiencing a lower affordable housing inventory.

Today, more than one-third of the total residents in Florida rent housing. The National Low Income Housing Coalition confirms that Floridians in the lower-income bracket spend almost 80% of their total income on rents. It is a result of unfavorable housing prices and high mortgage rates.

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Changes in the economy will determine how high the interest rates rise. /Photo by Quang Nguyen Vinh from Pexels

Inflation in Florida

Inflation is the general increase of consumable goods and other services. It often comes with no increase in the hourly wages, forcing consumers to pay more for services at the detriment of their pocket. Moreover, based on studies conducted by the federal reserve and other housing organizations, the increase in inflation leads to a corresponding rise in mortgage rates. This way, the loan lenders will need help to balance the rising cost of goods and services and make profits with the higher interest rate they charge.

It means changes in the economy will determine the interest rates in mortgages with a stable economy having lower interest rates and a struggling economy with a higher interest rate. It puts residents at the mercy of loan sharks despite the high-interest rates.

"Globalization is not a monolithic force but an evolving set of consequences-some good,some bad and some unintended. It is the new reality." -John B. Larson-

This article is for informational purposes only. It should not be considered Financial, Real Estate, or Legal Advice. The market fluctuates; therefore, not all information will remain the same. Consult a Financial or Real Estate attorney before making significant real estate decisions.

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I am a Licensed Community Association Manager for the State of Florida and a published author. My top articles are about Florida RE, property management, and the many beautiful venues and activities available in the Sunshine State. Thank you for reading my work and joining me on the journey.

Kissimmee, FL
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