How rising interest rates affect buyers and the market as a whole.
Today I want to talk about the subject on everyone’s minds: rising interest rates and what they mean for our market.
The reality is that rates have climbed significantly in a short period. In January, rates were at 3%, and now in May, rates are between 5% and 5.5%. That is a big increase, but rates are still low from a historical perspective. My parents bought a home when rates were at 18%, and rates were around 7% when I bought my first house.
How has this affected the market, though? Some buyers have backed out because they couldn’t afford to keep up with the rising rates. However, others realize that rates are on the rise and are making aggressive offers so they can secure a home at today’s rate.
Interest rates have a drastic impact on your buying power. If you get a $500,000 mortgage at a 3% interest rate, your monthly payment would be $2,108. At today’s rate of 5.5%, your payment would be $2,839 instead. That’s a difference of $700, which is a lot of money for many people. However, it is still affordable for a lot of buyers, and that’s why they’re still making aggressive offers.
If you are looking to buy, now is a good time. Interest rates are still attractive compared to where they may go in the future. If you have any real estate questions, feel free to call me at (718) 767-8200. I would love to hear from you.