Buyers don't wait another day! Mortgage rates increased from about 5 percent to 5.3 percent in in the last 7 days. And that means less buying power. For every 1 percentage point increase in mortgage rates a buyer's purchasing power is reduced by by about 10 percent.
For example, taking out a 30-year mortgage for $300,000 at a rate of 5 percent will cost you about $1,600 a month, not including taxes and insurance. But the same monthly payment at a rate of 6 percent will only get you a loan of $270,000.
As the economy improves and the Federal government steps out of the arena to help out, rates will continue to rise. Some preduct 6 percent rates by next year.
For people putting their homes on the market this spring, rising rates may actually be a good thing. Buyers are racing to complete their purchases and lock in something decent before rates go even higher state some news reports.
It's all about affordability. For every 1 percentage point rise in rates, 300,000 to 400,000 would-be buyers are priced out of the market in a given year, according to the National Association of Realtors.