The Future of Interest Rates

silhouette of a man pointing at elevator buttons one green arrow up othe red arrow down

While the recent past of future interest rates have been in question, the near future is not.  As of this writing, the interest rate on a 30-year fixed loan is about 4% (this means that for every $100,000 you borrow, your payment is $500 per month).

The Fed (the US Central Bank) has indicated that there will be three interest rate hikes this year, all amounting to about .25% each.  This means that by the end of 2018, our interest rates will likely be at about 4.75%.

How does this affect you?  With rising interest rates, buyers will not qualify for as large a loan.  Assuming that you are putting down about 20%.  The increased interest rate means that you will be able to afford 7.5% less house at the end of the year than the beginning of 2018.

If, for instance, you qualify for a $1,000,000 home today, after the three hikes you will qualify for about $925,000.

Even after the interest rate hike, rates will be at a historic low.  The average interest rate has been historically about 6.5%.  It is estimated that we will be back to 6% sometime in 2020.

That means it's better to buy sooner rather than later.  There are plenty of low down loan programs, and one that is even a ZERO down program.  Let's talk!

Post a Comment