The FED announced today that they would be raising the interest rate up .25% to 1.75%. They are predicting that they may raise the rates to as much as 5% over the course of 2018. What does this mean
Interest Rates On The Rise
The FED announced today that they would be raising the interest rate up .25% to 1.75%. They are predicting that they may raise the rates to as much as 5% over the course of 2018. What does this mean for the housing market? It greatly affects the buying power of buyers which in turn could affect home sales. We still have a housing shortage so home prices may not be affected.
Let's look at how this changes a buyer's buying power. If a buyer is purchasing a $250,000 home with a 20% down payment ($50,000) at 4.25% their month payment will be $984. Over the life of the loan that is a total of $354,197. Using the same stats and adjusting the interest rate up to the 5% would make the payment amount $1,074. That's an additional $90 per month in the payment amount. Over the full term of the loan that is $386,512 which is $32,315 more!
The monthly payment amount may seem like a small amount but what this interest rate change will do is shift buyers who would have been looking in one price range to look in a lower price range so that they may still get the payment amount they need. Obviously a 5% interest rate is still not a bad interest rate. It's still low compared to interest rates of the past but for those looking to capitalize on the current low interest rates now is the time to buy a home!
Give us a call and lets begin the hunt for your next home!
Dave Townsend has been a resident of Spring Hill, TN since 2007. He is a home and garden expert and has worked with home improvement companies on marketing campaigns. Dave is a member of the Gillig Gr....
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