Mortgage Interest Rates are Still Going Up… Should You Wait to Buy? This is the headline, but shouldn't it be Should you wait to Sell? Interest rates affect both the buying and the selling of real estate, they are intertwined now and forever. Let us take a step back away from the rates for a quick minute and just look at the product, the house. A house sells for the price a ready, willing and able buyer is willing to pay for it. The Seller, nor his Agent dictate the price, they base it on existing sales and perceived value; it is the buyer who determines the price. Mortgage interest rates, as reported by Freddie Mac, have increased by close to a quarter of a percent over the last several weeks. Freddie Mac, Fannie Mae, the Mortgage Bankers Association, and the National Association of Realtors are all calling for mortgage rates to rise another quarter of a percent by next year. In addition to the predictions from the four major reporting agencies mentioned above, the Federal Open Market Committee recently voted “unanimously to approve a 1/4 percentage point increase in the primary credit rate to 2.75 percent.” Historically, an increase in the primary credit rate has translated to an overall jump in mortgage interest rates as well. This has caused some purchasers to lament the fact that they may no longer be able to get a rate below 4%. However, we must realize that current rates are still at historic lows. Here is a chart showing the average mortgage interest rate over the last several decades:
There is much to consider as the cycle of our economy moves in a different directions. Interest rates just went up and they are headed up again the Fed tells us this week. How does that impact both the buyer and seller is the question. Below shares the Buyers risk. What this infographic does not take into the consideration is the softening of the market within this rise. Sale price and purchase price are forever connected. They will fluctuate at the same time, but never in the same way. You deserve to know balanced information so you are not swayed by any one factor. Call for some answers.
- The cost of waiting to buy is defined as the additional funds it would take to buy a home if prices & interest rates were to increase over a period of time.
- Freddie Mac predicts interest rates to rise to 5.2% by the third quarter of 2019.
- CoreLogic predicts home prices to appreciate by 5.1% over the next 12 months.
- If you are ready and willing to buy your dream home, find out if you are able to!