I’m sure by now you have all heard about the recent interest rate raise. So what’s next? What does it mean? Why are they going up? What will happen to home prices?
The general perception is that a raise in interest rates leads to a decrease in home prices. However, this is a sellers market. With such little inventory of homes to choose from, it’s anticipated for prices to rise. One of the most common things I hear is “We are waiting for the market to die down.” With slim pickins to choose from and the demand for home ownership heavily outweighing the rate at which homes are being built, you may be waiting some time.
Brian Troop, CEO of Troop Real Estate states, “In my opinion rates will gradually rise this year. We will probably see rates on a 30 year fixed around 4.5 % by year end. Based on this, I strongly recommend any buyers sitting on the fence to move forward with a purchase now rather than wait. Home prices should rise about 4-5% this year as well. It’s a sellers market and any sellers wanting to move should be able to get top dollar for their home.”
Even in speaking with lenders, the industry is hearing similar things. Stephanie Alderson, Snr Mortgage Consultant with On Q. Financial states, “I would suggest anyone looking to buy a home or refinance do so ASAP. Although rates are still overall low (compared to how they were 15 years ago) they are increasing at a relatively rapid rate at this current time. As rates increase, it can affect how much a buyer can qualify for and hinder their purchasing ability.” Considering there has been more interest rate increases in the last 2 years, then the previous decade. I think she makes a valid point.
Interest rates typically go up as a sign that the market is doing well. That being said, I wouldn’t anticipate a decrease anytime soon. Whether you’re looking to beat the next interest rate raise, or cash out on your equity, it all starts here.