The Impact of Higher Interest Rates: Last week, an article in...

The Impact of Higher Interest Rates:

Last week, an article in the Washington Post discussed a new ‘threat’ #homebuyers will soon be facing: higher #mortgage rates. The article revealed:

“The #mortgage Bankers Association expects that rates on 30-year loans could reach 4.8 percent by the end of next year, topping 5 percent in 2017. Rates haven’t been that high since the recession.”

How can this impact the housing market?

The article reported that recent analysis from Realtor.com found that -

“…as many as 7% of people who applied for a #mortgage during the first half of the year would have had trouble qualifying if rates rose by half a percentage point.”

This doesn’t necessarily mean that those buyers negatively impacted by a rate increase would not purchase a home. However, it would mean that they would either need to come up with substantially more cash for a down payment or settle for a lesser priced home.

Below is a table showing how a jump in #mortgage interest rates would impact the purchasing power of a prospective buyer on a $300,000 home.

Bottom Line

If you are considering a home purchase (either as a first time buyer or move-up buyer), purchasing sooner rather than later may make more sense from a pure financial outlook. http://www.simplifyingthemarket.com/2015/12/01/the-impact-of-higher-interest-rates/?a=242769-4eb2112ad1caac540e99a63dd199d5ed