How boosted interest rates can impact your buying power

It’s tempting, now more than ever, to walk away from the housing market. Interest rates are rising, starter homes continue to receive multiple offers and — let’s face it — buying a home can feel overwhelming.

But we’re giving you reason to pause. Yes, interest rates are rising. But they’re expected to continue rising. And rising interest rates can limit your buying power significantly.

Imagine you’ve been pre-approved for a $200,000 mortgage at 3.5 percent. Three months later, you’re pre-approved for a $175,000 mortgage at 4.5 percent. Higher interest rates limit your buying power.

The current average rate for a 30-year fixed mortgage is 5.5 percent. In June 2021, that number was just under 3 percent. For a $200,000 mortgage, that’s almost $300 more per month.

To curb inflation, the Federal Reserve has signaled interest rates will continue to rise in 2022 — and every point costs buyers dearly. To keep your buying power, consider staying in the game, especially if you’re serious about getting into a new home in the next year or two.

Feeling frustrated? Buyer fatigue is a real thing. When you partner with our team at Sterling Properties, we keep the process as stress-free as possible. Give us a call at 989-362-4585.

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