According to an article in today’s Chicago Tribune, home buyers shouldn’t wait much longer to buy, if they want to get a low percentage rate on a mortgage.
The article points out that the average rate on a 30-year mortgage jumped from around 5 to above 5.3 percent in the last week. The rising rates could stall economic recovery, if it makes it harder for potential buyers to afford a mortgage.
Still, in the short-term, it could drive sales as buyers rush to take advantage of lower rates. Sellers who are looking to unload their homes and condos in a hurry may benefit, as well.
If mortgage rates continue to rise, more and more buyers might regret waiting to buy. According to the article, for every 1 percentage point that the average rate rises, 300,000 to 400,000 buyers get priced out of the market. On top of that, purchasing power goes down $10,000 for every 1 percentage point that the rate goes up.
The strange twist is that mortgage rates are rising because of good economic news. As the economy recovers, several difference economic factors are driving rates up.
So if you’re selling, you might be cheered by this news. If you’re buying, than it’s the sooner, the better.
[Source: Chicago Tribune]