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Friday, May 11, 2018

Where Are Interest Rates Headed in 2018?

Interest rates have risen since the beginning of the year and are expected to increase again. Let’s discuss what this means for buyers and sellers in today’s market.

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A question many have been asking lately is, “What’s going on with interest rates?” The short answer is that they are going up. Rates have already risen this year and are expected to do so again in the future. Based on positive indicators in the US economy, the Fed is pushing rates back up and tempering years of policy that has been keeping them artificially low. Since the first of the year, rates have increased from around 3.99% to 4.5% as of May 2. It’s hard to say what the future holds, specifically, but I think it’s safe to anticipate a couple more increases by the end of the year. This could put us at, or even above, the 5% mark. However, even if rates do reach this level, they would still be low compared to historical averages. Freddie Mac has easily accessible data going back to the 1970s that supports this.

If you’ve been thinking of buying, now is absolutely a great time to take advantage of our market.
So if you’ve been thinking of buying, now is absolutely a great time to take advantage of our market. That said, it’s also a good time to sell. Rising rates will translate to decreased buying power, meaning the current market presents an opportunity for sellers to capture higher prices before this happens. Affordability has a major impact on how buyers make decisions. Even what seems like a small rate increase can have a significant effect on the dollar amount buyers pay for a home. If a buyer would have bought a home for $350,000 at the beginning of this year when interest rates were around 3.99%, their monthly mortgage payments would be $115 less expensive than if they bought a home at that same price today. By the end of the year, a buyer for that same home could see a $200 difference. If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.