With interest rates close to historical lows, it’s not surprising to read that “The Federal Reserve is taking steps towards weaning the housing market off its trillion-dollar support program” from the New York Times. Take a look at the chart on the left from MIP, who notes that “beginning mildly in October and strongly in November, we will see inflation beginning to rear its ugly head once again!” It makes sense to lock rates in now for 6 months if you are or are going to be in the market soon.
Why? The likelihood of rates reaching 6% next year is material.
See the example below of buying a $750k property at 5% interest with 20% down. It would take a 10% drop in the property price to bring that payment down to what it would have been at 5%. Over the course of 30 years, the extra percentage point adds up to well over $120k in cash out of your pocket.
Even those of you expecting that last 10% decline in prices would atill be better off considering a purchase today versus one a year from now.
