What Do Higher Interest Rates Mean For Home Buyers In 2016?
With both home prices and interest rates projected to increase over the next 12 months, buying (or moving-up), sooner rather than later, makes more sense than ever.
What will yesterday's increase in interest rates mean for home buyers? As many of you may already be aware, the Federal Reserve increased interest rates yesterday for the first time in almost a decade by a 1/4%. Moreover, the Fed indicated they will continue to gradually raise rates and expect that short-term rates will rise by about one percentage point per year for the next three years. This most likely means that the days of under 4% mortgage rates will gradually fade away, although it remains to be seen where mortgage rates will settle over the next several years. Nonetheless, the consensus seems to be that mortgage rates will be over 4.5% by fourth quarter 2016.
If you've been actively looking to purchase a home or just started thinking about it, the chart below shows how an increase in interest rates to 4.6% by this time in 2016 together with an increase in home prices averaging 5.2% over the next year can impact your purchasing power and carrying costs of a mortgage. And as a buyer, your concern must be about both home prices and interest rate increases in the coming year. All current predictions are that both will continue their upward trajectory in the next 12 months.
Another way to look at it, is to ask yourself if you would qualify for the same purchase price at a higher interest rate. Or will you need to "settle" for less house?
The Bottom Line: With both home prices and interest rates projected to increase over the next 12 months, buying (or moving-up), sooner rather than later, makes more sense than ever.
Contact us today so we can find the perfect fit for you and your family while rates are still this low!
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Higher interest on home mortgages means higher monthly payments.
Don't let next year's expected interest rate and home price increases price you out of your next home!
Nina Hollander
Broker, Realtor, CRS, GRI, ABR, SRES, CDPE, SFR, SPS, CMRS
Carolinas Realty Partners with RE/MAX Executive Realty
Direct: 704-779-0813
Website: www.GreatHomesInCharlotte.com
Blog: http://activerain.com/blogs/ninahollander
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