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Sunday, February 13, 2011

As interest rates rise, your buyer prospect pool shrinks...a little at a time.

Why be concerned about interest rates if you are selling your house or condo?  It should be the buyer’s concern, right?

I read an article in the Florida Today this week that proclaimed the “Shot at super low mortgage rates over.”  Actually, the article used the term absurdly low. 

The bottom line: 
  1. Interest rates on 30 year mortgages have risen above 5% for the first time since April 2010. 
  2. Analysts expect rates to rise to 5.5% through the end of this year.
We are in a buyer’s market (more houses for sale, fewer qualified buyers).  As interest rates rise the total monthly payment (principal, interest, taxes and insurance) rise. A buyer’s ability to qualify for a home loan does not rise with the interest rate thus they qualify for less costly housing. 

As a seller, would you not be better off pricing competitively in a declining market with rising interest rates?  As interest rates rise, your buyer prospect pool shrinks..a little at a time.

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