Welcome to our second episode of The Knowledge Broker by Chisum Realty Group. In this episode, we’ll be discussing the rising mortgage interest rates of 2018 and how the increase in interest rates may effect your buying power. Is you have any questions about this topic or have suggestions for future topics, please comment below. Thanks for watching!
Welcome to the Knowledge Broker, I’m Tara Chisum. Our goal is to ensure our clients are confident in every decision. So we brought in an expert to talk about the rising interest rates. Floyd Magee is our trusted lender who has helped numerous of our clients purchase and refinance homes. Thank you for being here. Thanks for having me.
So Floyd, tell us what you’re seeing in the market now.
So rates are on the rise, as you know, probably about a point higher than they were a year ago at this time. And that’s the trend, definitely since January 1st, it’s really kind of taken off since then this year, and the trend that we’re seeing and anticipate seeing that they’re going to continue to do that, keep going up for the remainder of the year and beyond.
And what does that one point mean for our buyers in terms of what they afford?
So, one point in interest rate means about 10% less purchase power. So last year, a payment at a certain rate, and a certain purchase power, would of meant X. And with rates being a point higher, that same payment means about 10% less home.
Okay, and in light of this information, how are you consulting your clients?
So, the first thing we’re doing in making sure they know the sky is not falling. Rate are going up, but, this was a plan for them to go up and historically rates are still very low. So we talk about that. And talk to them about their plans and where they are, and if you’re in a place where you really want to buy, and make that investment, now would be a good time because the trend is up and next year we might be a point higher than where we are today. So what’s that going to mean to you if you hold out too long. So we try to console them though that and make sure that if they want to do it, they’re doing it now.
Excellent. Thank you Floyd for sharing your knowledge. If you questions or comments about other topics that you would like for us to talk about please comment below and we’ll see you next time on The Knowledge Broker.