Rising Again? Mortgage Rates Affect Buyer And Sellers

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November 10, 2015 by Jeff Lowen

We all know the interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate the greater the payment will be. That’s why it is important to look at where rates are headed when deciding whether to buy now or wait until next year. This of course, has a direct reflection on your decision to list your home for sale as well. Higher rates = less buyers that can qualify for your home.

Below is a chart created using Freddie Mac’s October 2015 U.S. Economic & Housing Marketing Outlook. As you can see interest rates are projected to increase steadily over the course of the next 12 months.


Click the image for a larger view

How Will This Impact Your Mortgage Payment?

Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.

According to CoreLogic’s latest Home Price Index, national home prices have appreciated 6.4% from this time last year and are predicted to be 4.7% higher next year.

If both the predictions of home price and interest rate increases become reality, families would wind up paying considerably more for their next home.

How Will This Affect The Sale Of My Home?

Nationally, it’s an accepted statistic that when the interest rate goes up just one point, this immediately kicks hundreds of thousands of buyers out of the market and will most likely continue to rent. Locally, similar effects to you Mr. and Mrs. Homeseller, but in addition, the people who just yesterday were looking at homes 20% more expensive than yours, now must ‘settle’ for your price point and they’re not happy about it. This can make any transaction challenging at best. For example: They’ll want ALL the home inspection items fixed – even that smudge on wall near the light switch!

The Moral Of The Story…

Janet Yellen, Chair of the Board of Governors of the Federal Reserve System, just last week indicated that the current job numbers give her every excuse she needs to raise rates next month. Happy holidays!

Even a small increase in interest rate can impact your family’s wealth. Give us a call so we can help you to evaluate your ability to purchase your dream home, whether now is an optimum time to sell or just to get a good idea of the current value of your real estate empire.



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