How Current Interest Rates Can Have a High Impact on Purchasing Power

By
Real Estate Agent with Keller Williams Metro Center - Arlington, Alexandria, Vienna/Tyson's

According to Freddie Mac’s latest Primary Mortgage Market Survey, interest rates for a 30-year fixed rate mortgage are currently at 4.61%, which is still near record lows in comparison to recent history!

The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.

Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford to buy will decrease if you plan to stay within a certain monthly housing budget.

The chart below shows the impact that rising interest rates would have if you planned to purchase a home within the national median price range while keeping your principal and interest payments between $1,850-$1,900 a month.

With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, $10,000). Experts predict that mortgage rates will be closer to 5% by this time next year.

Act now to get the most house for your hard-earned money.

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Topic:
Real Estate Market Trends
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interest rates
first time home buyers
for buyers
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Rainmaker
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William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Higher rates will affect the buying power to a point but it may also stablize the values and it becomes more of a wash

May 22, 2018 06:34 AM #1
Rainmaker
22,879
James Grant
Asheville, NC

Good Morning, Juli, the higher rates will Affect the buyer a lot. Thanks for sharing!

May 22, 2018 08:28 AM #2
Rainmaker
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Juli Clifford
Keller Williams Metro Center - Arlington, Alexandria, Vienna/Tyson's - Arlington, VA

Interesting data we learned in our team meeting this morning. With rates projected to be close to 5% by Q1 2019, it could mean a payment over $100 more per month! It doesn't sound like much but in the life of the loan it could mean a lot!

May 22, 2018 10:13 AM #3
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Rainmaker
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Juli Clifford

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