Mortgage Rates Rise
This MSNBC article is a perfect example of how waiting for some mythological, dramatic drop in prices might actually price you out of the market because interest rates go up.
In just a few weeks interest rates for new homes have gone from 5.0% to 5.3%. See the article for the reasons why.
The rule of thumb is that every 1 percentage point increase in mortgage rates reduces a buyer’s purchasing power by about 10 percent. So, accordingly, if you’ve been waiting, your buying power has eroded by 3% in the last three weeks.
Now, interest rates are still historically low. The best I got on my house in 2001 was somewhere around 7%, as I recall. In 1981, they were over 15%. Yeah, really.
But if you are on the fence, now is the time to get off the fence. You have three weeks to get an offer accepted on a house if you want both historically low interest rates and the $8,000 tax credit.
