From time to time it is good to gain some perspective on the environment around you. The real estate market is dependent upon many factors, one of the most important being interest rates.  The affordability of a home depends upon two variables: price and interest rates.  A 1% hike in rates can mean a big difference in what type of house you can afford.  For example, a buyer borrowing $400,000 at 5% would make roughly the same payment as a buyer borrowing $357,000 at 6%.

While the market hasn’t been great over the past two years, imagine if the rates were not within a whisker of the all-time record lows.  These rates will not last forever.  Now is the time to take advantage.

The chart below shows monthly 30 year fixed interest rates since January of 1972.  Source of the raw data was Freddie Mac.

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