There is no doubt that historically low mortgage interest rates were a major impetus to housing recovery over the last several years. However, many industry experts are showing home buying checklist concern about the possible effect that the rising rates will have moving forward.
The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are all projecting that mortgage interest rates will move upward in 2017. Increasing interest rates will definitely impact purchasers and may stifle demand.
In a recent study of industry experts, “rising mortgage interest rates, and their impact on mortgage affordability” was named by 56% as the force they think will have the most significant impact on U.S. housing in 2017. If rising rates slow demand for housing, home values will be impacted.
To this point, Pulsenomics, recently surveyed a panel of over 100 economists, investment strategists, and housing market analysts, asking the question “In your opinion, at what level will the 30-year fixed rate mortgage rate significantly slow home value appreciation?” The survey revealed the following home buying checklist:
Most experts believe that rates would need to hit 5% or above to have an impact on home prices. See more Home Buying Checklist – click here
BUYING IS NOW 37.7% CHEAPER THAN RENTING IN THE US
The results of the latest Rent vs. Home Buying Checklist Report from Trulia show that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.
The updated numbers actually show that the range is an average of 17.4% less expensive in Honolulu (HI), all the way up to 53.2% less expensive in Miami & West Palm Beach (FL), and 37.7% nationwide!
Other interesting findings in the report include:
• Interest rates have remained low, and even though home prices have appreciated around the country, they haven’t greatly outpaced rental appreciation.
• Home prices would have to appreciate by a range of over 23% in Honolulu (HI), up to over 45% in Ventura County (CA), to reach the tipping point of renting being less expensive than buying. (Home Buying Checklist)
• Nationally, rates would have to reach 9.1%, a 145% increase over today’s average of 3.7%, for renting to be cheaper than buying. Home Buying Checklist Rates haven’t been that high since January of 1995, according to Freddie Mac.
BUYING A HOME?
CONSIDER COST NOT JUST PRICE
As a seller, you will be most concerned about ‘short term price’ – where home values are
headed over the next six months. As a buyer, however, you must not be concerned about
price, but instead about the ‘long term cost’ of the home.
The Mortgage Bankers Association (MBA), the National Association of Realtors (NAR) and
Freddie Mac all project that mortgage interest rates will increase by this time next year.
According to CoreLogic’s most recent Home Price Index Report, home prices will appreciate by
5.2% over the next 12 months.
What Does This Mean as a Buyer?
Here is a simple demonstration of the impact an interest rate increase would have on the
mortgage payment of a home selling for approximately $250,000 today if home prices
appreciate by the 5.2% predicted by CoreLogic over the next twelve months: Click Here To View The Full Content- Things to Consider When Buying a Home