Last week I posted market data which showed that there was shrinking inventory and that homes were staying on the market for less time.

I want to tell you this week about interest rates. You’ve probably heard that interest rates are climbing again. In just the last two months, they have gone up from about 5% to 5.25%. At their lowest point last year they were at about 4.25%.

This is huge. While interest rates are at their lowest point in centuries (really), every incremental change increases the cost of owning a home. We have every indication that rates are going to keep moving upward.

For instance, if you buy a $100,000 house at 5.5% interest, your monthly payment (before taxes and insurance) would be $568. The same house at 6% interest would cost $600 per month.

That extra $32 per month is $384 per year or $11,520 over the life of the loan!

Another way to look at it is that in order to have the same payment every month that you had at 5.5% interest, you could only afford a house that costs $95,000 at 6% interest.

So, what does this mean? It means that you want to consider getting in to the market before interest rates go up.

It also means that you probably want to act before both prices and interest rates go up. That is to be avoided!

Give me a call. I’m more than happy to help you navigate the market: 602-456-9388.