Interest rates are vital in real estate. Here’s why.
Interest rate fluctuations are always a necessary topic in real estate. In June, interest rates reached the low to mid-threes, but in June of last year, they were still up around 4.5%. This April, interest rates were the lowest they’ve been in 30 years at 3.5%.
One of our lenders recently quoted rates as low as 2.5% on a 30-year fixed mortgage. For comparison, when I bought my first house about 40 years ago, I paid approximately an 11% interest rate.
Let’s say a property costs $430,000 with a 3.5% interest rate; the payment would be $1,931 per month, not including taxes or insurance. Last year, with interest rates around 4.5%, the payment for that same property would be $2,179— $248 more per month than the lower interest rate, which is almost $3,000 more per year. Compared to a year ago, this gives buyers $50,000 more in buying power. Those are great savings for people buying today.
Hopefully, this information was helpful, and you can sit down with your clients and either raise the price of their home or help them enter the marketplace with more knowledge.
If you have questions about this or I can help you in any way, call or email me. I’d be happy to speak with you.
