Recently, an article published by the Washington Post noted a new “threat” that homebuyers will soon face is higher mortgage rates. As revealed in the article:
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.
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.
While this does not necessarily mean that those buyers that are negatively impacted by a rate increase would not purchase a home, it means that those buyers would need to either come up with extra cash for a larger down payment or settle for a home that is priced in a lower range.
Based on the table below, a prospective buyer on a $300,000 home would see their purchasing power decrease if mortgage interest rates increase.
From a pure financial outlook, purchasing a home sooner rather than later may be an ideal move if you are considering making a move anytime soon. Contact me today to see what your options are.