Interest rates have gone up this year. According to many experts, it will likely rise further during 2015. This is important information for home buyers. Expected interest rate fluctuations in 2015 and what NH buyers must be aware of is discussed further below.
Why Expected Interest Rate Fluctuations In 2015 Are Important
The amount of your monthly mortgage cost is a reflection of your interest rate. Increases in interest rates will lower your approval amount or make the monthly payment higher each month for the same mortgage amount. Even a small change will create a difference. If you are searching for a house at the max of your price range, a minimal rate increase could really impact you.
Below is an example of how max purchase price might change with interest rates. This assumes a fixed down payment percentage and keeping the monthly payment the same.
| Interest Rate | Max Price |
|---|---|
| 4.00% | $393,552 |
| 4.25% | $381,932 |
| 4.50% | $370,817 |
| 4.75% | $360,181 |
| 5.00% | $350,000 |
| 5.25% | $340,250 |
| 5.50% | $330,911 |
| 5.75% | $321,961 |
| 6.00% | $313,381 |
Other Affordability Factors
In addition to interest rates, increases in home values can also make a significant difference. In many areas, purchase prices have been improving steadily for a year or so. Bidding wars and sales above list price are common again. A lot of this was created by fewer homes for sale than usual.
What NH Buyers Must Be Aware Of When Contemplating Whether to Buy Now or Later
Upward interest rates and home prices both negatively impact home buyers. People will notice that their price point lowers as this continues. The type of properties at a particular price point will downgrade too. Keeping this all in mind, it is seemingly best to buy now instead of waiting.
About The Spring Housing Market
Spring is normally the busiest time of year for the real estate market. There should be more inventory to satisfy the built up demand, but expect competition. People electing to purchase will benefit from still somewhat low interest rates. Additional improvements in home prices will offer a chance to gain equity more rapidly than typical.