With the impending election on November 8, and with the Federal Reserve meeting in December, many people are wondering what will happen with interest rates.
The Federal Reserve will meet on December 13 and 14 to determine the economic projections and to provide additional context for the Federal Open Market Committee's (FOMC) policy decisions. (The FOMC is comprised of 12 members--the 7 members of the Board of Governors and 5 of the 12 Reserve Bank presidents.)
So, what does this mean to a seller or buyer?
We have seen historically low interest rates for about six years now. In the Denver market we have seen homes priced below the $350,000 price point in the last 18 months quickly go under contract, sometimes in less than 24 hours, receiving multiple offers, and with offers over the asking price. With homes priced in the $400,000 range and above, these homes have remained longer on the market. So, for sellers, if the interest rate goes up, essentially it shrinks the buyer pool, which means there could be less people who can afford your home.
For buyers, if the interest rate goes up, you could end up paying more interest over the life of the loan. For example, if you have a $350,000 loan with 5% down, just a quarter percent increase in the interest rate would mean you would pay approximately $20,000 more over the life of the loan.
Everyone likes to list their homes in the spring for a number of reasons. However, there is more competition with more inventory in the spring. Right now is a great time to sell before the interest rate goes up, as there is less inventory on the market with less competition, and there are still serious buyers out there who are looking to purchase now.
Evaluate your housing needs. If this is the right time for you to sell or buy before the interest rate goes up, let me help you to sell your current home and help you purchase your next home.
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