Impact of Interest Rates on Washtenaw County Home Buyers

Rates are historic lows.  Should you wait to buy?  Do you think rates are going lower?  Do you think home prices are going lower? Take a look at Ann Arbor Area market timing for real estate trends. So what are you to do?

If you look at the chart below you will find scenarios of stable prices and lower rates, lower price and rising rates, etc.  See what happens to home mortgage payments.

To figure out which was a smarter bet–counting on home prices to fall further or interest rates to rise–our Keller Williams research department took the last ten years of monthly home price and mortgage interest rate data and ran the numbers to see which was more likely: an increase in mortgage rates or a further drop in home prices. Here’s what Keller Williams found:

  1. A one percent increase in mortgage rates is ten times more likely to happen than a ten percent drop      in home prices.
  2. A one percent rate increase more than offsets a ten percent reduction in home prices.
  3. When interest rates fall by one percent, the total interest paid is almost three times more than the      interest savings from a ten percent drop in home prices.
  4. The probability of both happening at the same time is ridiculously small, and homeowners would      still pay 15 percent more in interest over the life of the loan.

Interest rates have been at 50 years lows. Potential home buyers need to understand the positive financial impact low interest rates have on the cost of Ann Arbor Area home ownership and the thousands of dollars that can be saved over the life of a typical mortgage loan. For those who can afford to buy, trade up, or invest, our current market presents a lifetime opportunity.  Talk to our preferred lenders to take advantage ofknowing your options.  Call us 734-274-9544.  I wrote about Mortgage Calculators to give some test run options.  If you want help with pre approval from a trusted lender, click here.