What Is Happening to Your Buying Power?

How will rising interest rates affect you as a buyer? Here is what you need to know.
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I’m sure you have heard about interest rates in the news, so let’s talk about what you have been hearing and how interest rates are affecting the market.

The news about rising interest rates is creating a bit of hysteria, and there are some reasons for that fear.

If we take a look at where mortgage rates have been each week since the beginning of the year, each and every week, they have gone up. In total, rates have gone up almost half a percentage. That may not sound like much, but let’s see how much that rising interest rate affects your buying power.

As you can see in the red graph in the video at 0:55, Freddie Mac is projecting that rates will be close to 5% by the end of the year. That’s a pretty big jump. If the projections come true, there is no question that it will affect purchasing power. 
“
As interest rates go up, purchasing
power goes down.”
In order to see what that does to you and everyone else in the market, let’s use a $300,000 home (the effect will be the same no matter the price point). Let’s assume that a buyer wanted to try their best to keep their mortgage payment, as well as principal and interest, to about $1,400 a month. As interest rates go up, what will happen to their purchasing power? It goes down. So if we are going to get an even 4.75%, a person who, at the beginning of the year, could have bought a $300,000 home with a $1,400 monthly payment now has to look at a $270,000 home. That is a lot less home for the same monthly payment, and a huge impact on your purchasing power.

If you know you want to move, then you’ll never be able to buy more home  for the money you’re spending now. Now is the time to act. Get into that dream home before the home prices and mortgage rates go up; we are here to help you every step of the way.

We can help you find a great lender who can provide you with excellent service and great rates. We can plug you into our system so that you will hear about the hottest new deals, even before the market as a whole knows about them. We are here to hold your hand and help you with every detail every step of the way. All you need to do is reach out to us, and we can help make your real estate dreams come true.