Interest rates have been at a all time low for the past few years on part to bounce back from the 2008 recession. Personally I thought rates would of gone up a year or two ago but they remained low in the 3.25% to 3.85% range. The Fed had announced three rate hikes will be in order for 2017 starting in March about a quarter percent higher each raise, it is three raises so it wouldn't be all at once to soften the impact.
Now we are seeing mortgage interest rates starting near 4.125% and will most likely be around 5% at the end of the year. As far as 2018 nothing has been scheduled but has been reported that there will be more increases as the economy has caught up to itself. My advice to buyers is to lock in earlier the better. How will this affect the real estate industry? Sounds a little plain and simple but this will affect the qualification amount on purchase price due to debt to income ratios. Example a buyer that qualifies for a $500,000 loan now may only qualify for a $475,000 loan with a half of a percent increase, some say this may bring home prices down a little to accommodate in the near future although as of yet median home prices still continue to rise near 3% annually. Why are home prices still rising, mainly due to a low supply and high demand combined with a steady economy, the stock market is at a high point as well the currency of the dollar.
Overall in the big picture interest rates are still low, I bought my first home in 2002 and began with a 7.25% rate. We may of heard stories of our parents saying they had a rate of 15% when they got their home forty years ago, almost sounds unbelievable.
Thank you reading my blog, feel free to share any insights as I enjoy following current market trends.