How a slight increase in interest rates can have a profound impact on buying decisions
America’s most popular online real estate website, Zillow, recently analyzed data and discovered that if interest rates increase by one percentage point - this could have a devastating impact on those looking to buy.
The findings were broken down into different metropolitan areas and the effect this increase could have on mortgages. The outcome didn’t have the best news – depending on where you are thinking about buying, this one percent increase could put homes in your chosen location out of financial reach.
The West Coast took the lead as having the most dramatic repercussions after the one percent interest rate increase. Monthly mortgage payments for the same house in San Jose would rise by about $710 per month. Yes, you heard that right. San Francisco homes would increase by $556/month and Los Angeles homes would increase by almost $500/month. These may seem like staggering findings, but the list goes on.
Zillow pointed out other metropolitan areas such as Seattle, Portland, New York, Boston, Las Vegas, Atlanta, and more. Austin rounded out the list, with the lowest increase of around $100/month. While this amount may be manageable for many, the over $700 estimate for San Jose would likely exclude many buyers from the market in that area altogether.
So what does this mean for buyers looking for real estate in the areas with the highest potential impact? While interest rates and home prices are expected to increase, you still have some time. The best advice is – if you’re thinking about buying, this may be the time to do less thinking and more acting. The first step to take is to see if you have the finances to qualify for a home loan by going through the pre-approval process.
While many of these areas have yet to see an actual increase in interest rates, with home values appreciating and interest rates expected to rise, this increase is likely to become a reality. Our Housing Buzz Team understands that this reality check is a lot to come to terms with. However, it doesn’t have to burst any bubbles or plans to buy. Now that you know the profound impacts such a minor increase can have, you can start taking steps to move closer towards your goals of homeownership with the right financial expectations in mind.
To find out more about getting pre-approved to buy or to speak with a Team Member about your specific needs and situation, please contact us today.
No related categories
No related entries