Mainstream news has not been talking much about interest rates yet I bet it is something they will be talking about soon. Most people are not aware that interest rates have been moving higher. This is something that we all expected yet there are some concerns that buyers and seller need to take into consideration.
- If interest rates increase by only 1%, that equates to about $10,000 more in interest payments on the buyer’s loan. So, paying 1% more is often the same as paying $10,000 more. Of course, it could be a lot more for properties above $200,000.
- When interest rates increase, the payments of the buyers new mortgage increases also. If the payments increase, buyers cannot qualify to buy as much property. In other words, the buyer's buying power decreases.
- If the buyer cannot spend as much because of higher interest rates, then that could decrease demand for existing listing inventory. A decrease in demand eventually has a negative impact on pricing.
- Remember, prices have already increased - forcing the buyers to spend more for the same home. Now that we see higher listing prices, here come the higher interest rates. Combine a higher price with a higher interest rate and we have something we need to pay attention to. In this situation, the buyer has to pay more, yet it is not going in the seller’s pocket…It is going in the bank's pocket.
This is not information to panic about, but it is always good to be informed. There are already buyers that are being denied financing due to payment increases. We have had a great 12 months in the Myrtle Beach real estate market and we hope this will continue.
We feel it is our duty to keep the public informed and this is one more attempt to fulfill our commitment. If you feel you are in need of additional discussions, we are happy to answer questions and serve you.
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