Today we’re going to talk about the current real estate market and how it relates to interest rates.
In January, interest rates were sitting around 3 -3.25%. Fast forward to now and we’re around the mid fives. What does this mean if you’re a buyer? It’s kind of a big deal and you need to be paying attention.
For every 1% that an interest rate goes up, it takes away 10% of affordability. Meaning, if you were approved for $500,000, if interest rates went up 1%, that means you’re now approved for only $450,000. What’s important for this is to make sure you want to shop below your max buying point.. Keep an eye out on interest rates and make sure you have a recent reapproval (another more than 2-3 weeks, you’re going to want to make sure you’re still okay with your lender).
Check with your lender to find out if they have any programs available – you may be able to lock in on an interest rate for 90 days (also see if they’re willing to let you float down to a new rate in the event that rates do go down).
What is going to look like for the rest of the year? Well we don’t have a crystal ball, but we do know what the Feds are saying, and that’s that they plan to raise rates another 6 times between now and the end of 2023. Keep in mind that we’ve been spoiled with interest rates. We’re now back to about 2017 rates.. They’re still great. Remember, it wasn’t uncommon to see interest rates in the 80’s and 90’s in the double digits with a peak of 18.45% in 1981!
There’s actually some good news for buyers around this too! For every 1% that an interest rate goes up, the market loses about 18% of buyers…they simply can’t afford it. This may be the time that you’re able to find your dream home and not have the same crazy bidding war that we were getting so used to seeing.
As always, we’re watching the market closely and Mandi Henriod and The Stern Team is here if you have any questions at all!!
