Why should St. Louis and St. Charles County, Missouri area real estate agents, investors and buyers be concerned about mortgage interest rates? Because mortgage rates can largely impact what a home buyer can purchase.
While rising home prices can limit how much house a home buyer can purchase, mortgage rates also add to the total cost of a home purchase. Lenders add these rates when figuring the total amount they will let you borrow for a mortgage loan. Higher costs of borrowing money means less of that money can be used toward the actual property.
A swift rise in mortgage rates may require current homebuyers to readjust their purchase plans. They may decide to save for a larger down payment, look for a less expensive home, choose an adjustable-rate mortgage with a lower starting interest rate or they may choose to exit the housing market until another time.
For those who aren’t already homeowners, mortgage rates could affect the tipping point at which renting or buying a home is more affordable. However in the St. Louis and St. Charles County areas of Missouri, purchasing a home can still be more affordable than renting when it comes to monthly mortgage payments versus monthly rent payments.
Mortgage rates are based on rates set by the Federal Reserve. The Fed’s strategy to assist the nation post-recession was to keep rates very low. But this means the rates have nowhere to go but up. Economists expect an improving economy over the next several years, meaning rates are expected to steadily raise.“With rising rates it might be best not to buy a home that is a financial stretch,” says Kelly Boehmer. “Now is the time to consider a home that is at or under budget.”
Despite rising mortgage rates, new home sales contracts went up by 3.7% in January. While existing home sales rose by 3.3% in January – the fastest pace since February 2007.
Despite rising mortgage rates, new home sales contracts went up by 3.7% in January. While existing home sales rose by 3.3% in January – the fastest pace since February 2007.
According to Linda Boehmer, "Ultimately it is other factors, like a strong economy, that have a bigger impact on house prices than changes in mortgage rates."
Check with your lender if you are concerned about how higher mortgage rates might affect you. Chances are the difference may only be $40-$75 month. If you need a referral for an experienced and trustworthy mortgage lender, contact The Boehmer Team for contact information on several reputable area lenders.
