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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 percent 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.

BuyersPurchasingPower3-KCM

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.?For more information, please contact The Olear Team today!