All good things must come to an end they say and it looks like that is true when it comes to the lowest interest rates in 40 years. Interest rates in Southern Maryland and across the nation are on the rise. Bankrate.com reports that interest rates have risen in the past two weeks from 4.91% to 5.45 percent. This is the biggest jump in rates in the past six months. The BaltimoreSun.com reports today's rate is 5.34% for a 30-year fixed loan.
* Interest rates are not expected to go below 5%.
* Interest rates may hit the 6% mark.
* Interest rates affect your buying power.
* Interest rates affect you ability to qualify for a loan.
Interest rates are not expected to go below 5%
* After a quick rise in interest rates, historically, interest rates fall back but only slightly.
* Economic and mortgage experts do not expect interest rates to fall back below 5%.
* According to a Mortgage Rate Trend Survey, it is a split decision whether interest rates will even decline slightly in the next 90 days.
Interest rates may hit the 6% mark
* Bernard Baumohl of Economic Outlook Group states that interest rates could go as high as 6.5% in the near future.
Interest rates affect your buying power
* A slight increase in interest rates diminishes your buying power by thousands of dollars.
* Example:
A home purchased for $266,000 with an interest rate of 4.91% equals a mortgage payment of $1414.
A home purchased for $253,500 with an interest rate of 5.34% equals a mortgage payment of $1414.
Your buying power has been diminished by $12,500.
Interest rates affect your ability to qualify for a loan
* The loan amount you can qualify for is based on your income.
* Example: Sales price $266,000
At 4.94%, the required yearly income needed is $68,500.
At 5.34%, the required yearly income needed is $71,500.
Homes prices in the tri-county area of Calvert County, Charles County and St. Mary's County are at the best affordability levels since 2004. As the housing market stabilizes, home prices will go the way of the interest rates: up. First-time buyers and repeat buyers can take advantage of the best opportunity in years: low prices and interest rates.
Although, interest rates have gone up, they are still very low. Anything near the 5% mark is a great rate. Don't let opportunity pass you by.
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