To easily estimate income requirements and estimated monthly mortgage payments based upon changing interest rates check out this mortgage qualification/payment calculator. You may be surprised by the numbers you see. Of course everything is relative and some may feel the change is manageable while others may be knocked out of the buyer pool based on decreased affordability. Regardless of your situation, it’s important to know how increased mortgage rates affect you.
You may have heard that lower home prices are ALWAYS the result of increased mortgage interest rates. That’s what I heard for the early years of my curiosity about home ownership. I’m a lot smarter now and realize that the ONLY thing that effects home prices is simple supply and demand. As long as we are seeing the shortages in inventory that we’ve experienced over the last two years, prices will remain stable and appreciation will occur. Of course, if interest rates increase to the degree that it impacts affordability beyond a certain level, we will see changes in demand as the buyer pool shrinks.
What direction are interest rates expected to go for the remainder of 2018? There is nearly universal consensus that rates will only go up. If I were to go out on a limb I would predict that by the end of the year we will see mortgage interest rates hovering around 6%. If you’re hoping to purchase a home this year, the best thing you can do is talk to a lender. A good lender will be able to tell you exactly how increased mortgage rates affect you and what you can do to prepare to purchase your dream home. To learn more about some of the lenders my clients love, click here.
And for one more nibble for thought, when thinking about owning vs renting, keep in mind that rent prices are going up in the Phoenix metro market at a rapid pace. KTAR newsreports a 5% increase in rental rates, which may make these incremental mortgage interest rates look not so bad after all!