Denver housing market faces pressure as mortgage rate buydowns expire

In the south Denver, Colorado, housing market, homeowners who utilized 2-1 mortgage rate buydowns are facing financial pressure as these temporary programs expire. The buydown structure allowed buyers to pay interest rates two percent lower in the first year and one percent lower in the second, with the expectation that market rates would decrease before the full rate took effect in the third year.

However, with mortgage rates remaining between 6% and 7%, many homeowners are unable to afford the full interest payments. Michele Gwin of RE/MAX Professionals notes that while some are attempting to sell, others lack sufficient equity due to stagnant home values. Some homeowners are reportedly refinancing into new buydowns in an attempt to delay the impact of higher rates.

The local market is currently characterized by a lack of movement, driven by homeowners with low legacy rates who are unwilling to sell, high current interest rates, and cautious buyers.