Going back 50 years in history, there has never been a time when mortgage rates are as favorable as they are today. The question is, how much longer will rates remain at historically low levels?
Higher rates – albeit not drastically higher – may come as early as this fall. The Federal Reserve has been talking about raising rates for months now, and most economists think the Fed will raise them by 0.25% before the year is out.
Yahoo Finance reports:
WILL A RATE HIKE HAVE AN EFFECT ON HOME SALES? WHAT ABOUT HOME PRICES?
Perhaps, but more so home buyer activity than prices, says Hepp. That’s because higher mortgage rates could be a game changer for some home buyers because monthly mortgage payments would go up.
Higher rates, for example, could push a first-time home buyer to purchase a different or less expensive home, or delay buying to come up with a larger down payment. Climbing rates could also lead a buyer to choose a different type of mortgage with a lower interest rate or exit the housing market altogether. That change in buyer activity could then affect home prices negatively; People who already own a home may not be able to sell their starter homes, which could affect their ability to turnaround and buy a larger home and eventually that would push home prices lower.
But, Hepp cautions, all of that is more likely to happen if rates were to rise suddenly and drastically, and that isn’t going to be the case. “The increase is going to be very minimal and gradual and the impact on the home buyer activity should not be significant,” she says.
>> read the full article at finance.yahoo.com