How Much Do Mortgage Interest Rates Affect Both Buyers and Sellers?
The recent downgrading of our AAA bond rating will almost certainly have an affect on long term mortgage interest rates. Mortgage interest rates have already been manipulated to record low levels in the past number of years. Low mortgage interest rates subsidized ultimately by us, the tax payers and the burden of additional national debt cannot continue.
We’re often asked the question, “Is this a good time to be buying or selling real estate?” To help answer this question take a look at this table that shows how monthly house payments are affected by rising interest rates:
A 1% increase in interest rates from 4.5% to 5.5% results in a 10.7% loss of buying power!
A 2% increase in interest rates from 4.5% to 6.5% results in a 19.7% loss in buying power!
Interest rates have nowhere to go but up. As a seller, the pool of buyers who can qualify to purchase your home as interest rates increase is greatly limited. As a buyer, as interest rates increase, the amount of home you can afford is drastically reduced.
Experts have mixed opinions as to whether housing prices have found their bottom. However, this table does show that interest rate fluctuations may have more of a profound affect on the housing market than potential decreases in housing values.
If you or someone you know is trying to decide if this is a good time to make a move, we would be happy to sit down with you and review your personal situation in order to help you to make sound decisions that are in your best interest!