Rising Mortgage Rates

Posted on at 1:52 pm by Andrea Webber

Economists warn that rising mortgage rates could have a big impact on buyers shopping for real estate. Every increase in interest rate will exclude a percentage of buyers from becoming owners, especially first-time purchasers. Many have been sitting on the fence on buying while the interest rates have remained so low but seeing home prices rise by double digits per year in some major cities.

The addition of a new cap on the mortgage interest deduction and an additional new cap on state and local property tax deductions mean that home prices in the more expensive markets could begin to see a dip coming.

What to do?

Buyers: If you are looking to purchase, you may want to speed up your home search this spring to take advantage of today’s rates. The Federal Reserve has warned that short-term interest rates are likely this year, the result being that – starting this month – mortgage rates could move higher at least three times this year. Mortgage rates are now already at a 4-year high, averaging out at 4.46%. The forecast is 5.00% by the end of 2018.

According to a realtor.com® survey, over 40% of home buyers say that these rate increases will force them to settle for a smaller, less expensive home. This would typically entail moving further out of town and then require a longer commute to the place of work. First-time buyers may be most affected by rising mortgage rates, as increasing home prices and interest price many totally out of the market.

Sellers: If you are thinking about placing your home on the market, this sense of urgency may help you. Buyers need to get their lender’s pre-approval, lock in today’s rate, and find the right property within the time-frame afforded them by their financial institution.

If this is your time to get off the fence to buy or sell, contact me for a no-obligation consultation.

Andrea – Your Ski Resort Real Estate Advisor and Local Denver Expert

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