Today, I want to go over what interest rates are doing in the local market and how they impact buyers and sellers.
Since the beginning of 2018, mortgage interest rates have increased from 4.0% to 4.625% for a 30-year mortgage. That might not seem like a significant jump, and, historically speaking, a 4.625% interest rate is still very low.
Here’s the thing—that increase has an impact on a buyer’s ability to borrow money to buy real estate.
If you are a homebuyer and you want a specific monthly mortgage payment based on your income, you’ve lost 7.2% in purchasing power. That means you have the ability to buy 7.2% less home for the same monthly payment.
As a seller, since people who are interested in buying your home have lost some purchasing power, there will be a downward effect on prices and the offers that they might be able to make.
That said, the real estate market in Chicago is still very strong. This is a fairly recent development but it is significant, so I wanted to make sure that everyone was aware of it.
It looks like rates will continue to increase over the course of 2018. If you have any questions about how rising interest rates will impact your 2018 real estate goals, just give me a call or send me an email. I would be happy to help you!