Clock is ticking down on rise in interest rates – What it means for real estate

Interest Rates_Tru Brit Realty Group_Keller Williams RealtyPortland, ME: The clock is ticking down on a likely hike in interest rates by the Feds, the first such increase since June 2006 and one which will surely trigger a rise in mortgage interest rates.

The commentary below is provided by local lender Casey Hamlin, Branch Manager/Loan Officer at Northpoint Mortgage:

“The state of the current mortgage market rates are between 3.875% and 4.375% depending upon program and buyer qualifications.  It is widely believed that the Federal Reserve will increase interest rates after their next meeting on December 16th.  If that happens then investors anticipate that mortgage rates will increase.  Just a .25% increase in interest rates can result in $36/month more in payment (based off a $250K loan amount).  That is over $13,000 on a 30 year home loan.  There are other factors that influence mortgage rates such as how the US economy is doing and monetary policy abroad.

 

“Based on the National Association of Realtors Affordability Index for September of 2015 (most recent available) the index is at 162.4 for the Northeast.  The housing affordability index measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the regional level based on the most recent price and income data.  A value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median priced home.  An index above 100 signifies that a family earning the median income has more than enough income to qualify for a median priced home.  This time last year it was at 165.6 which demonstrates that homes are slightly less affordable than they were in September of 2014.  In 2012 the index was at 193.3.  What this tells us is that homes are still very affordable in relation to our average income and opportunity is still available, but the window to capitalize on this opportunity is closing.”

Change in the market is customary and an interest rate rise represents yet a market adjustment. The impact is predicted to be a slowing in property appreciation and some decline in buyer activity. Certainly the sky isn’t falling and even with a rise, rates are still historically low. However, this may not be the first time we see rates go up and progressive rate increases are not out of the question into the new year.

If you are thinking of buying a home call us today to learn more about our VIP Buyer Program on 207-553-2662 or email trubritrealty@gmail.com

To learn more about getting pre-approved for a mortgage contact Casey Hamlin at Team Hamlin, Northpoint Mortgage, on 207-749-6502 or email chamlin@trynorthpoint.com

 

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