The days of record-low mortgage rates are coming to an end. If you’ve been on the fence about purchasing a new home, what does it mean for you?
The historically low interest rates that we’ve experienced over the last few years were the result of the housing collapse/financial crisis of 2008. The federal reserve put rates at 0% to help revive the collapsed housing market, but the US economy has since recovered and investor expectations are that it’ll likely grow faster in 2017. Two rate hikes by the federal reserve makes it more expensive for banks to borrow money, which will eventually make it more expensive for consumers to borrow money.
Even with higher interest rates, the National Realtor Association expects housing sales to increase by 2% in 2017. Rate increases won’t price most buyers out of purchasing a home, but there will be some concessions. Buyers will be forced to look at different subdivisions or smaller properties to make buying a home affordable.
If you’ve been on the fence about purchasing your first home, you still have some time before rates continue to rise. Even a small increase of one eighth to one half percent higher than they are today, can cost a home buyer thousands of dollars.