The Impact of Rising Interest Rates...

By
Real Estate Agent with Keller Williams Realty Evolution - Topsfield, MA 92593-B

I remember when my wife and I were house hunting in the mid-1980s. Housing prices were rising and interest rates were rising. We were wondering if we'd really be able to afford a house if the trajectory on pricing and interest kept rising. We had been looking for a bit and were getting antsy BUT we knew the market. Finally, we found a home that was underpriced and needed updating. We offered full price with a credit for the replacement of the septic. The interest rate was locked in at 13%. The one thing we were certain of was interest rates will come down at some point. They eventually made it to 18%. Interest rates did fall and each time they fell by 2 points we refinanced. We also paid extra principal. 

The point is, rising rates may be of concern but don't let that deter you. I suspect we will see rates near 6% or more, maybe, before they cycle back down and settle in. The longer you wait to pull the trigger the more it will cost you. Have your game plan ready to enact when rates start moving down after the rise. They will!

Below is an article and a graph that shows the monetary impact of rising rates. Thank you KCM.

 

How To Approach Rising Mortgage Rates as a Buyer

How To Approach Rising Mortgage Rates as a Buyer

In the last few weeks, the average 30-year fixed mortgage rate from Freddie Mac inched up to 5%. While that news may have you questioning the timing of your home search, the truth is, timing has never been more important. Even though you may be tempted to put your plans on hold in hopes that rates will fall, waiting will only cost you more. Mortgage rates are forecast to continue rising in the year ahead.

If you’re thinking of buying a home, here are a few things to keep in mind so you can succeed even as mortgage rates rise.

How Rising Mortgage Rates Impact You

Mortgage rates play a significant role in your home search. As rates go up, they impact how much you’ll pay in your monthly mortgage payment, which directly affects how much you can comfortably afford. Here’s an example of how even a quarter-point increase can have a big impact on your monthly payment (see chart below):

How To Approach Rising Mortgage Rates as a Buyer | Keeping Current Matters

With mortgage rates on the rise, you’ve likely seen your purchasing power impacted already. Instead of delaying your plans, today’s rates should motivate you to purchase now before rates increase more. Use that motivation to energize your search and plan your next steps accordingly.

The best way to prepare is to work with a trusted real estate advisor now. An agent can connect you with a trusted lender, help you adjust your search based on your budget, and make sure you’re ready to act quickly when it’s time to make an offer.

Bottom Line

Serious buyers should approach rising rates as a motivating factor to buy sooner, not a reason to wait. Waiting will cost you more in the long run. Work with a real estate professional to understand your budget and how you can be prepared to buy your home before rates climb higher.

Posted by

I pray that God our Father and the Lord Jesus Christ will be kind to you and bless you with peace

2 Thessalonians 1:2

 

Doug Dawes REALTOR®, AWREP, LMC

Broker Sales Associate

KELLER WILLIAMS REALTY - Topsfield/Newburyport

49 Main Street
Topsfield, MA 01983
 978-887-3995  ~ Office
 978-270-3037  ~ Cell
 DougDawes@KW.com

Comments (14)

Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Doug, you made a good decision, and I too bought, but probably at the top of the market, my interest rate for a while was 17%.

Apr 20, 2022 08:55 AM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi Doug - yes I remember those times too.  We got through them and we will get through them now.

Apr 20, 2022 09:25 AM
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Doug,  i can remember my first house was 8.5% but when I moved for work, my next house was 16.5% and I kept refi. till I got it back down to 8%

Apr 20, 2022 09:32 AM
Doug Dawes
Keller Williams Realty Evolution - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

Joan Cox 

There is nothing new. We just keep going through cycles. It's an uncomfortable feeling seeing rates rise when you're seeking to buy.

Apr 20, 2022 12:18 PM
Doug Dawes
Keller Williams Realty Evolution - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

Just like we get through all things when they strike. These things are cyclical Grant Schneider 

Apr 20, 2022 12:19 PM
Doug Dawes
Keller Williams Realty Evolution - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

You and I think alike Will Hamm Glad you knew enough to refi 

Apr 20, 2022 12:21 PM
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co Notary Services retired RE Broker

Good "Moral of the story" Doug Dawes . I purchased my first home in 1973 and I wasn't concerned about interest rates because I knew I could afford my house payment at the time. I didn't even know you could refi at the time. I think it had dropped about 8% before I caught on. 🙃

Apr 20, 2022 01:43 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Doug I talk to the Fence Sitters time to get off the fence, or if you take too long you will be getting less house, simple as that, Endre

Apr 20, 2022 10:34 PM
Doug Dawes
Keller Williams Realty Evolution - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

Bob "RealMan" Timm 

We were like 10+ years after you when we bought. At least you caught on.

Apr 26, 2022 01:22 PM
Doug Dawes
Keller Williams Realty Evolution - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

I think most of us sit on the fence far too long Endre Barath, Jr.  

When we bought we knew the market and purchased our home $30K under market. We offered full price.

Apr 26, 2022 01:26 PM
Roy Kelley
Retired - Gaithersburg, MD

The higher mortgage interest rates will make it more difficult for some prospects to qualify. Many of us were in the business when 6% rates were pretty much standard and have seen times when rates were much higher than that. I remember thinking that if rates got back down to 12%, we would be okay.

Apr 28, 2022 06:10 AM
Doug Dawes
Keller Williams Realty Evolution - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

Hi Roy Kelley 

Years ago I had asked my father why he wasn't paying off his house since he owed so little. His reply was "Where am I going to get 6.25% money these days?" 6% was the accepted norm

Apr 28, 2022 08:46 AM
Roy Kelley
Retired - Gaithersburg, MD

Good Friday morning, Doug.

Have a great day and an outstanding weekend.

Apr 29, 2022 07:06 AM
Doug Dawes
Keller Williams Realty Evolution - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

Likewise Roy Kelley Cool and very breezy up this way today, Friday

Apr 29, 2022 09:34 AM