What Increasing Interest Rates Mean For Homebuyers
No matter your occupation, we’ve all noticed rising prices in items that are part of our everyday life. Whether it’s fuel, clothing, or groceries, inflation has been taking a steadily increasing amount from our pockets. It’s no different for real estate. In case you missed it, this past week’s announcement by the Federal Reserve set a big increase in interest rates and means several more rounds of rate hikes are on the way in upcoming months.
Dr. Lawrence Association of REALTORS® shared valuable insight on what’s happening and what to expect, “So far, the shortterm fed funds rate that the Fed directly controls has risen by 175 basis points. But the 30-year fixed rate mortgage has risen even more – by nearly 300 basis points. On the same $300,000 mortgage, the monthly payment has risen from $1265 in December to $1800 today. That’s painful and, consequently, will shrink the buyer pool.” These higher interest rates are aimed to combat inflation and will definitely throw a wet blanket on the real estate industry until they come back down again. And for those who don’t think these rates will have much of an effect, consider that higher interest rates equate to less buying power. Compared to only a year ago, if you were looking to purchase a $400,000 home, with the increased rates, your buying power decreases to the $300,000 range. Buyers may have to look at smaller homes with less amenities to stay in their comfortable budget range. So yes, the housing market continues to shift everywhere which is why it is so crucial to utilize the expertise of a Realtor®. Whether you’re buying or selling, finding the right window to purchase or a sell a home is essential. Always trust your real estate needs to a Realtor®. That’s Who We R®. Founded in 1912, Greater Chattanooga REALTORS® is a regional organization with more than 2,500 members servicing Hamilton and Sequatchie counties in southeast Tennessee and Catoosa, Dade, and Walker counties in northwest Georgia. The Association is one of approximately 1,100 local associations/board of REALTORS® nationwide that comprise the National Association of REALTORS®. Greater Chattanooga REALTORS® owns and operates a Multiple Listing Service (MLS), which is one of approximately 600 MLSs in the country and services more than 2,700 MLS users.