The Effect of Rising Interest Rates on Your Buying Power
Interest rates play a major impact on your buying power, and they’re rising. What are the rates now? What are they projected to hit by the end of the year? And, what does it mean for you? Let’s take a look:
Current Interest Rates
Here are the current mortgage rates for Texas, as found on Bankrate.com:
For an accurate value, consult a mortgage lender in your area.
Interest Rate Forecast 2017
Mortgage rates increased by a quarter of a percentage point at the Federal Reserve’s March 15 meeting, and it looks as if they will increase rates by 0.25 percent two more times this year, at their June 14 meeting and September 20 or December 13 meeting. According to Kiplinger, by the end of 2017, interest rates are expected to increase to 4.6 percent for 30-year fixed mortgage rates and 3.8 percent for 15-year fixed mortgage rates. However, this is just a forecast – any number of disturbances in the economy can affect these forecasted rates.
Interest Rates & Buyer Power
Do rising rates affect your buying power? They do, and more significantly than you may think. The interest rate you lock in greatly impacts the amount of money your lender lets you borrow; and, the sum of money borrowed affects how much home you can afford to buy. The more interest rates increase, the less home you can afford to purchase.
On top of rising interest rates, home values are also increasing around the DFW area…what does this mean? It means that as interest rates AND home values rise, there are fewer homes on the market you can afford to purchase.
If you are in the market to buy a home, or you’ve been considering it for some time, now may be the time to take action. Lock in a lower interest rate before they increase by the end of the year.
Do you want to purchase a home in the DFW area? Give us a call; we would be happy to provide guidance.