Interest Rates, What Happens When You Wait to Buy a Home
Lawrence Yun, the Cheif Economist for the National Association of Realtors (NAR), says that we are in a rising interest rate environment. The Federal Reserve has done 4 interest rate hikes in 2018 alone and 9 interest rate hikes since 2015. Even in December of 2018, when the stock market was already uneasy, the Federal Reserve raised interest rates. The excessively low interest rates that the Federal Reserve implemented during the Great Recession to encourage economic growth have ended and the Federal Reserve has to raise interest rates in order to avoid a high rate of inflation. Below you can see the impact of rising interest rates. In this example, a 1% rise in interest rates makes a mortgage payment go up by $275 per month, which costs an additional $23,144 over the lifetime of a loan. Each year home prices are rising by an average of 6% a year as well.
The good news is that we still have historically low interest rates. You will not be buying a home with interest rates as low as they were in 2017 & 2018, but you will be buying a home at a fairly low interest rate in 2019.