Interest Rates on the Rise? What does this mean to you?
Interest rates are on the rise, what does that mean to both buyers and sellers?
A couple of weeks ago, interest rates went up from 4.25% to 4.50% on a 30 yr fixed conventional loan. From what we can see (into our crystal ball) it looks as if rates will rise again at least one more time this year…and maybe possibly two more times, but our wizard powers can only take us so far.
So what does this mean for our buyers, who are already competing against low inventory and multiple offers? Well let’s take a look and compare the monthly payments.
In this example we will be using a home price of $400,000. The buyer would be putting down 20% ($80,000) and the loan term would be 30 years:
At 4.25% - the monthly payment (Principal and Interest only) would be $1,649.
At 4.50% - the monthly payment (Principal and Interest only) would be $1,696.
A difference of $50 per month or $1.67 per day.
Not exactly the end of the world…However, the longer you wait to make a decision, you run the risk of facing another rise in the interest rates, which in turn would raise your monthly payment slightly again. So if you are thinking about buying, now is the time to make a move.
So what does this mean for our sellers, who are thinking about selling? Well, if the interest rates start to rise at a quicker pace, then this could potentially but the brakes on a lot of the buyers in the marketplace. Which in turn could force the rising house prices to level off. So if you are thinking about catching in on the upward swing, now is the time to get your home on the market as we enter the “selling season” of 2018.
Remember interest rates can change daily in either direction (up or down), so be sure to give us a call and we will get you the current rate and help guide you through what is best for you.