The Federal Reserve announced it would raise short-term interest rates a quarter-percentage point and signaled it could lift them at a slightly more aggressive pace in coming years. Mortgage Rates immediately increased after this announcement. Additional fed rate increases throughout the year could push mortgage interest rates as high as 5% by year’s end.
How do rising mortgage rates affect your purchase power?
Buyers need to know what it really means when mortgage rates are rising. Purchase Power is the price of a home you can afford and is directly impacted by current mortgage rate when your purchase. Here is an example to explain…
If you qualify for a maximum monthly payment of $1,200 and interest rates are at 4.5%, then you would have the Purchase Power to buy a home up to $240,000.
Sales Price of $240,000
4.5% interest rate
$1,196 per month
30-year fixed rate
20 percent down payment
Loan amount of $192,000
What happens with a 1% increase in interest rate?
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