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How Rising Interest Rates Will Impact Home Purchase Affordability

November 15, 2010

Did you know…

  1. A one percent increase in mortgage rates is ten times more likely to happen than a ten percent drop in home prices.
  2. A one percent rate increase more than offsets a ten percent reduction in home prices.
  3. When interest rates fall by one percent, the total interest paid is almost three times more than the interest savings from a ten percent drop in home prices.
  4. The probability of both happening at the same time is ridiculously small, and homeowners would still pay 15 percent more in interest over the life of the loan.

To arrive at the conclusions above, Keller Williams’ research department took the last ten years of monthly home price and mortgage interest rate data and ran the numbers to see which was more likely: an increase in mortgage rates or a further drop in home prices.

Check out this chart-

 

Potential home buyers need to understand the positive financial impact low interest rates have on the cost of home ownership and the thousands of dollars that can be saved over the life of a typical mortgage loan. For those who can afford to buy, trade up, or invest, our current market presents a lifetime opportunity!

For full blog post, click below

How Rising Interest Rates Will Impact Affordability.

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