The National Association of Realtors released an article March 12, 2018 outlining the impact of rising rates on home buyers. While still low compared to 1980s and 1990s, rates today are the highest they’ve been in four years. The Fed announced a rate hike two days ago, March 21, and housing economists are predicting mortgage rates will reach 5% before the end of 2018.
Looking at Chicago’s February 2017-2018 data, housing inventory is down -8.6% YOY, the median sales price has trended steadily upward +10.7%. Between competition, increasing prices, and rising rates… now might be your best time to buy.
Realtor.com® offers this example: On a $300,000 house with a 30-year fixed-rate mortgage and 20 percent down payment, the difference between a 4 percent and 5 percent mortgage rate is $142 a month. Calculated over the life of the loan, that is more than an extra $51,000.
- If you’re on the fence about buying, speak with your realtor and financial advisor to weigh your best options financially – renting or buying now
- Buyers who are concerned about rising rates may want to lock in with a lender
From National Association of Realtors:
Rising mortgage rates could have a big impact on the direction your buyers choose when shopping for real estate, economists warn. “Every time the interest rates go up, you eliminate a group of people who can no longer afford to buy a house,” Don Frommeyer, a mortgage broker at Marine Bank in Indianapolis, told realtor.com®. “Some people may have to rent for a period of time until they make more money—or buy a smaller house.”
For the full article from NAR, see here.