I was looking over my recent blogs and found that not even a month ago I asked "Is it Time for You to Refinance?". When I posted that blog on May 19th, the interest rate was 4.75%.  So, homeowners who did not refinance at that time may have missed the boat.

Interest rates have been rising rapidly for the past three weeks.  Many states in the lower 48 have already experienced interest rates of 6% and above.  Just yesterday, RealtyTimes.com reported that interest rates were going up and no one was predicting how high they will go.  Bernard Baumohl of the Economic Outlook Group says that interest rates could go as high as 6.5% in the near future.

After a sudden and rapid rise in interest rates, the interest rates will sometimes fall back temporarily.  That must be where we are today because interest rates fell back.  Today's Anchorage Alaska mortgage interest rate is: 5.625%.

Are interest rates headed back up or will they continue to go down?  It seems even the experts don't know for sure.  For the past three weeks. all the mortgage alerts have reported that interest rates were going up and IF they fell back, it would only be slightly.  All agree that the days of historically low interest rates (4.5%) are gone, most likely forever.

I am not a mortgage lender nor am I an economist but this is what I would have the Anchorage home buyer remember:

    * Interest rates affect your buying power to purchase a home at the same payment.

• The move from 4.75% to the current 5.625% has diminished what you can buy by about $15,000.

    * Interest rates affect the income required to qualify for the same loan amount.

• The move from 4.75% to the current 5.625% has increased the required income by over $4,000 (gross annual income).

Now is the time to buy:

    * Now is the time to buy to take advantage of the buyer's market in Anchorage.
    * Now is the time to buy to take advantage of today's interest rates.
    * Now is the time to buy to take advantage of the first-time home buyer tax credit (escrow must close by Nov 30).

Interest rates were 6.5% a year ago.  For eight years before that, they were at the 7% mark.  Before that, interest rates were 9% and, at times, in the double digits.  Some economic analysts are predicting an inflationary period on the horizon due to the stimulus spending.  If that materializes, not only will interest rates soar, but housing prices will increase as well.

Thinking of buying?  Now is the time.

Pauline Hofseth, your Anchorage real estate specialist