Interest rates are creeping back up again, which means the longer buyers wait to make their move in our market, the more their buying power decreases.
When people hear the words “buyer’s purchasing power,” they tend to think they can buy a $200,000 house today, tomorrow, or next year and still have the same mortgage payment.
That isn’t exactly true, and it’s because of interest rates. Interest rates have been at an all-time low in the recent past, but now they’re starting to creep back up again. Every expert economist is predicting that we’ll be closer to 4.75% to 5% by the end of this year and starting into 2018.
How will this affect you if you’re thinking of buying a home soon?
If you bought a home at $200,000 when the interest rate was at 3.75%, your mortgage payment would’ve been $926 per month. At the current rates, if you bought a home priced between $190,000 and $195,000, your monthly payment would be between $931 and $935. In other words, your buying power has decreased 2.5% to 5% and you’ve lost about $10,000 since that 3.75% benchmark.
If you waited until interest rates went up to 5%, you’d be paying $966 per month if you purchased a $180,000 house. That’s a $20,000 loss, which is a lot of money in a competitive market like ours in Charlotte.
Think twice before waiting and signing your next lease. The longer you wait, the higher rates will rise and the more your buying power will decrease.
If you’re thinking you want to buy now or have any other questions about our Charlotte market, don’t hesitate to give us a call or send us an email. We’d be happy to help.