Absolutely! Interest rates have been low for a long time now and we are starting to see them move higher. The good news is that means we have a healthier economy. With the good comes the bad, it affects the affordability for home buyers.
Today a buyer can buy a $300,000 home with a principal and interest payment of $1,476 per month. If rates go up to 5% that same home will cost a buyer $1,610 per month. If that buyer only qualifies for a payment of $1,476 per month, they will need to buy a home that is priced at $275,000. In other words, a three-quarter percent change in interest rates will reduce the home a buyer can afford by $25,000, or just over 8%. If you’re considering a move within the next couple of years, it would be well advised to meet with your Realtor® to discuss how this may affect your investment.
Blog post provided by: Todd Urbanski – Realtor, Director of Agent Development at Fazendin Realtors