Interest Rates Are Rising

INTEREST RATES EXPECTED TO RISE IN 2022

WHAT IT MEANS FOR HOME BUYERS

ARE YOU YOU PREPARED ?

HIGH INFLATION SPURRING EXPECTED INTEREST RATE INCREASES.

As you likely have noticed in the news, and especially as you shop, prices for just about everything have been jumping . . . a lot.

The US Federal Reserve recently announced an important change in its interest rate policy. The Fed signaled that it will begin tightening credit in 2022 in order to restrain future price increases.

At A Glance:

The Federal Reserve is expected to raise short-term interest rates a total of 75 basis points (0.75%) in 2022.

0.75% doesn’t look like a large number… until we take a look at the details:

0.75% / 3.15 = 23.8%

( Basis Point Increase In Mortgage Interest Rate / Current Avg 30Yr Fixed Rate Mortgage

= Percentage Increase In Mortgage Interest Payments )

WHAT THIS MEANS FOR HOME BUYERS:

For prospective home buyers, a 75 basis point rise in mortgage rates would mean that your mortgage debt service payments on the home you buy in late 2022 would be over 23.8% higher than what your payments would be on a home you purchased today.  That’s a sizable increase in mortgage carrying costs!

Prospective home buyers would be wise to play it safe and accelerate your 2022 home purchase plans, if at all possible. You should try to secure a home early in 2022 to beat the expected rise in rates.

WHAT THIS MEANS FOR HOME SELLERS:

For prospective home sellers, a 23% increase in buyers’ mortgage costs would reduce the number of buyers who can qualify to purchase your home.  And that could put downwards pressure on the selling price of your property later in 2022.

Home sellers would be smart to get their properties on the market earlier in 2022 rather than later. Why delay and take the risk of rising rates putting downwards pressure on home prices later in 2022?

Post a Comment