How Do Rising Interest Rates Affect You?

Interest rates have been on the rise since the election. How does this impact you as a buyer or seller?

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Interest rates have really changed since the election; how do rising interest rates impact you?

On election day, the 30-year fixed interest rate was 3.47%; today, that interest rate is 4.05%, according to the national average. In other words, interest rates have gone up 16.7% since the election. 

What does that mean? If you were to get a $200,000 mortgage, put 20% down, and finance the purchase over 30 years, your mortgage payment went from $718 a month to $768 a month. Your monthly payment went up by $50, which equals $600 a year.

Here is the good news: interest rates are still historically low and they have dropped recently. If you lock in a low rate now, you won’t run the risk of rates increasing later in the year.

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Although rates have gone up, they are still historically low.

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The Federal Reserve did say that they would raise rates three more times in 2017. If rates go up, it would cost you more money to finance the same house. If rates go down, you can always refinance, but when rates go up, you could get priced out of the home. You could also end up paying a lot more money for the same home that would have been less expensive if you had made the purchase earlier in the year.

A lot of buyers are purchasing homes now before rates go up again. Sellers are putting their homes on the market to take advantage of this high buyer demand so that they are not subject to higher interest rates on their next home purchase.

If you have any other questions about interest rates or the real estate market in general, give me a call or send me an email. I would be happy to help you!