How Rising Interest Rates Will Impact Affordability

 

Check out this article from blog.kw.com.

 

How Rising Interest Rates Will Impact Affordability

   

“In a recent Forbes blog post, multimillionaire hedge fund manager John Paulson declared that today’s record-low interest rates made this the best time to Buy homes in fifty years. “If you don’t own a home, buy one,” Paulson said. “If you own one home, buy another one, and if you own two homes, buy a third and lend your relatives the money to buy a home.”  Why should we care what Paulson thinks? Well, he was among the few to accurately predict the subprime collapse and, while no one has a crystal ball, a closer look at the numbers supports his call to action.

Historically low interest rates are the key…and they aren’t likely to hang around for long. Buyers who “choose to wait until prices come down more” are gambling that interest rates will hold steady or drop. The truth is even a 10 percent drop in home prices is nullified by a 1 percent increase in interest rates. The figure below illustrates how this works for a $250,000 home purchase and the relative likelihood of each scenario.

 

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(Forbes 2010)

Interest rates have dominated the news in recent months as we've shattered record low after record low. Potential home Buyers need to understand the positive financial impact low interest rates have on the cost of home ownership and the thousands of dollars that can be saved over the life of a typical mortgage loan. For those who can afford to Buy, trade up, or invest, our current market presents a lifetime opportunity.”

 

If you have any questions about how this will impact you and for all of your Real Estate needs, please contact The Evelo Team at 317-863-4663 or at Team@EveloTeam.com.