How Are Interest Rates Affecting The Real Estate Market?

With interest rates on the rise, it makes the real estate market a bit more challenging for both buyers and sellers.  Below is a little perspective on where we currently stand in the world of real estate.

For Buyers – Higher interest rates mean higher monthly mortgage payments – This only results in less buying power for potential buyers seeking to secure a mortgage.  Buyers wanting to purchase a home today may find themselves having to re-prioritize their “wants & needs” when considering their home purchase to make up the difference higher interest rates pose on your monthly mortgage payment.  

The chart below illustrates where interest rates were in January 2022, where they are now, and where they may be going – and how might this affect your monthly mortgage payment.  

In the example below, if you are looking to take out a home loan for $200,000, and take a 30-year mortgage, put a 20% down payment of $40,000, you will have a $160,000 mortgage. If you only put down 10%, you will have a $180,000 mortgage. The following table shows you how much you’ll pay each month – 

Interest RatePayment with 20% downPayment with 10% down
3.5%$718$808*
4%$764$859*
4.5%$811$912*
5%$858$966*
5.5%$908$1,022*
6%$959$1,079*
6.5%$1,011$1,137*
7%$1,064$1,197*
7.5%$1,118$1,258*

*Payment amounts shown do not include private mortgage insurance (PMI), which may be required on loans with down payments less than 20%. The actual monthly payment may be higher, this also excludes taxes and insurance.  

I would recommend that you speak to your mortgage lender about what programs they may have to offer their borrowers that may just offer you some savings along the way or in the long term.  With that you can decide what makes the best sense for you.  

Important to note:  Do keep in mind – while interest rates are higher “today” then they were 6+ months ago – we do not know where they will be tomorrow right?  But if I had to give a good guess, I believe there is a great likelihood that they will be higher tomorrow.  So, give careful consideration to your “why” before you decide to step in or step out of the market … as we only know what we know right now!

For Sellers – The rise in interest rates not only affects the buyers, but it does also affect the seller as well.  While we are still considered to be in a seller’s market in our area – it is not the craze we saw in earlier months, but still seeing multiple offers on some of our properties if the home is priced well, along with no major objections. If your “why” is telling you – now is the time to sell, speak to a trusted real estate professional who will give you an analysis on what your homes market value is in today’s market, and then price accordingly.  Pricing is key in any market and still holds true in today’s market as well. With some buyers stepping out of the market, waiting to see how everything shakes out – your buyer pool is slimming down. Add to that – the holidays are right around the corner where traditionally you will see a slowing of the market.  Speak to a trusted real estate professional to discuss what your real estate goals tare o determine how best to move forward.

There are many moving parts in today’s world that is really taking its toll on just about everything.   Nonetheless, life goes on – so having the knowledge you need to get through this place in time – will only help you in your decision-making process looking forward. 

Any questions or concerns?   Reach out to me … I am here to help!

Laura

The Key To Your Real Estate Success

Helping buyers & sellers achieve their real estate goals

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