Interest rates can have a big impact on what type of home buyers can afford. After all, something as minor as a quarter of a percent creates an increase of $625 per year on a $250,000 mortgage. When rates climb even higher, buyers can suffer from extreme sticker shock. Unfortunately, the Federal Reserve has already raised interest rates three times this year, which could make 2017 a difficult time for many prospective home buyers. Therefore, it’s not surprising that studies have discovered that 81 percent of shoppers are concerned about interest rates.
The Latest Interest Rate Increase
On March 15, the Fed raised interest rates a quarter point. Some analysts expected an even higher increase, but this may not comfort would-be buyers who keep seeing the cost of their dream home get further out of their reach. To make matters even worse, it’s expected that the Fed will boost rates against at least two more times before the end of the year. These rate increases will most likely happen in June and December. In other words, if you’re interested in a fixed rate mortgage, you’re going to want to make a move before June.
Current Owners Also Worried
Prospective buyers who aren’t locked into a mortgage have the most fear, but existing owners are also concerned about the continual interest rate increases. This is due to multiple factors, including variable rate mortgages. According to a study by Berkshire Hathaway Home Services, more than half of owners also indicated that they are fearful they won’t be able to afford a new home in the future. The interest rates are actually currently low based on historical data. However, economic woes from the 2008 housing market crash are almost certainly increasing anxiety as rates continue to creep up.
Temporary Boom in House Sales?
A recent study discovered that 20 percent of prospective buyers are more likely to make a purchase before rates go up again. This is a vital piece of information that the real estate and home construction industries are undoubtedly banking on. Therefore, it’s possible that the Federal Reserve’s latest decision will prompt many people to make a purchasing decision within the next couple of months. This could provide the industry with a temporary boom, but sales may also end up softening dramatically after the next interest rate increase.
Getting a Clean Title
Interest rates are concerning enough; you don’t need to worry about whether or not the property’s title is clean. Learn how Lakeside Title Company can help by checking out our homepage!