Search Properties

Interest Rates Moving?

Posted By Shirley Smith @ Nov 29th 2016 11:15am In: Financing

We are all hearing the rumblings that interest rates will be climbing in the coming year.  Maybe it's time to get off the fence and rethink purchasing.  Inventory is extremely low in San Diego County and with rates potentially on the rise as well as home prices you may get priced out of the market.  When your ready to talk real estate I'm here.

How Historically Low Interest Rates Increase Your Purchasing Power

How Historically Low Interest Rates Increase Your Purchasing Power | MyKCM

According to Freddie Mac’s latest Primary Mortgage Market Survey, interest rates for a 30-year fixed rate mortgage are currently at 3.47%. Rates have remained at or below 3.5% each of the last 16 weeks, marking a historic low.

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 will decrease if you plan to stay within a certain monthly housing budget.

The chart below shows what impact rising interest rates would have if you planned to purchase a home within the national median price range, and planned to keep your principal and interest payments at or about $1,100 a month.

How Historically Low Interest Rates Increase Your Purchasing Power | MyKCM

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, $6,250). Experts predict that mortgage rates will be closer to 4% by this time next year.

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



Comments (0)

Comments have been closed for this post.
Please contact us if you have any questions or comments.