Thinking About Waiting to Buy? Might Want to Think Again!

By on 12 July, 2017 in Real Estate, Sandra Nickel with 0 Comments

Forgive me if this sounds a bit commercial. After all, I am real estate agent and my team and I make our living selling houses. So you may find me a bit suspect.

What drives me to write this today is my many years in the business and memories of people who have told me, “Why didn’t you warn me that this could happen?” What I’m talking about, of course, is rising interest rates.

Mortgage interest rates have stayed so low for so long that I’m fearful we have an entire generation of would-be homebuyers (and refinancers) who’ve never seen a great rate slip through their fingers. And, oh the cost when it does!

The interest rate on the mortgage is a reflection of the cost of borrowing the money to make a large purchase. But the interest rate spread over a long term loan will mean that your future income is tied up in making payments for a while. That means that small differences get amplified over time. Who knew that a mere ¼% increase in interest rates reduces a person’s borrowing power by 10 percent?

I was around when rates began their precipitous rise in the late 1970s, culminating in an unbelievable 17.5% in 1981. If you want to context for that amazing number, it was like trying to finance a house on a credit card!

I was around when rates finally fell below double digits in late 1986, only to spike back up to 10% in April of 1987.

I was around in July 1993 with rates at 7 ¼% only to see them bounce back up to 9% only 15 months later.

It has happened before. It can happen again. Just don’t say I didn’t warn you!

Sandra Nickel has been listing and selling residential real estate for over 30 years, most with an intense focus on Montgomery’s Midtown neighborhoods. Sandra serves on the Mid-Alabama Coalition for the Homeless, the Cloverdale Business Coalition, Historic Southview, the Volunteer and Information Center, Landmarks Foundation and her own neighborhood Garden District Preservation Association.

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