Rising Interest Rates Could Affect Your Purchasing Power in Central Texas
The 30-year fixed rate on a mortgage has risen about a half percent in the last six to eight months. But, how could these rising interest rates affect you as a property owner or property buyer looking to in Central Texas?
As the potential buyer, if you have stagnant prices and rising interest rates, the $300,000 home you are considering now has a mortgage payment of $80 to $90 more per month to pay. As the seller, meanwhile, it limits the number of buyers that potentially can afford your home because of the increased monthly payment.
Taking appreciation rates into account, they have varied over the last eight years. They were sometimes as high as 10% to 15% year over year. And, they have been at 0% to 5% year over year depending on where you are talking about.
Assuming a safe 3% to 5% appreciation on a $300,000 home over the next six months, if rates rise another 0.5% and values continue to rise 3% to 4%, that $300,000 home is now a $315,000 home.
The mortgage payment with the rising interest rate 0.5% is going to be $190 more per month than it would be if the rate was 0.5% lower and the appreciation was 3% less.
We have had eight years of great appreciation and low interest rates. This year, however, is definitely seeing some changes with rising interest rates. And it is affecting buyers and sellers.
If you are a seller who is considering selling, you have had some great appreciation and now may be a good time to look at selling to move up or downsize. If you are looking to buy, it may be a great idea to do that sooner rather than later if you are limited to your monthly outlay.
If you want to speak to me about buying or selling, please do not hesitate to contact me by phone or email. I look forward to speaking with you soon.