Interest rates are predicted to continue rising. Today I want to take a look at what it means for your clients.

Today I want to take a minute to talk about a common topic in the real estate industry: interest rate predictions.

Jamie Dimon, the CEO of JPMorgan Chase, predicts that the yield on the 10-year Treasury bond will go up 5% in the next 24 to 36 months. Typically the spread between the 10-year Treasury bond and a 30-year mortgage is about a 1.75% yield. The yield as of August 7 for a 30-year mortgage is 4.75% with a spread of 1.77%. If the yield goes to 5% then the 30-year mortgage rates rise to 6.75%

With these interest rate changes, your clients’ buying power will of course be affected. For example, if they were to buy a home for $290,000 with 5% down, their payment would be $1,437. However, if they wait until the interest rate increases to 6.75%, that same loan would give them a payment of $1,786 per month. This $349 increase in interest paid per month is nearly $4,200 per year and $125,000 over the life of the loan.

“Now is the time to encourage your buyers and sellers to jump into the market before it is too late.”

Since we believe that the interest rates are going to increase, now is the time to encourage your buyers and sellers to jump into the market before it is too late.

If you have any questions, please feel free to reach out to me. I look forward to speaking with you soon.

This communication is provided to you for informational purposes only and should not be relied upon by you. Nate Martinez nor RE/MAX Professionals are not mortgage lenders and so you should contact a qualified mortgage broker directly to learn more about its mortgage products and your eligibility for such products.