The housing market has never been as hot as the last couple of years. A combination of a low inventory, supply chain issues, and high demand has sent prices through the figurative roof at a record pace.
No longer bound to downtown offices, remote workers can save thousands on housing costs by migrating to the suburbs and beyond. The most significant contributor for those moving has been record-low interest rates on mortgages.
But with news that the Federal Reserve is raising interest rates on fixed-rate home loans, many are wondering if housing prices will fall as a result. Unfortunately, the truth is that the answer isn’t a universal one as some markets will see slow growth while others may not even notice.
Right now, the interest rate increase is driving demand from those who don’t want to miss out on locking in a low rate for the next 30 years. While higher lending costs tend to make buyers require a lower sales price, the focus has instead been on taking the plunge solely for the interest rates.
The interest rate of a mortgage makes a massive difference in the overall cost. For example, a $400,000 home at 2.8% will end up with about $200,000 in interest over the life of the loan. On the other hand, if interest rates hit 6%, the total interest paid would exceed $450,000. That’s an additional $250,000 for the same house, which is why buyers are so keen to snag the lowest rate possible.
Another area impacted by interest rates is the rental industry. If interest rates increase too much, potential home buyers may rent instead. This possibility has many looking to invest in rental properties with historically low rates.
EB Mortgage is a locally-owned mortgage company with experts in new home purchase, refinancing, and commercial loans. Our wholesale rates can’t be beaten. We offer more products, more options, and more solutions. Our “3C” Process is simple: complete our pre-approval request, consider options based on your requirements, and choose the offer that suits your needs best. Call us at 866-246-0516 or e-mail contact@ebwmtg.com today.
Written by the digital marketing team at Creative Programs & Systems: www.cpsmi.com.