How Interest Rate Hikes Effect Buying Power

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As Interets rates go up Buyer’s buying power diminishes –  a 1.5% hike in interest rates will cut your buying power by 13%.  In viewing the chart below the $1 million dollar home you could afford at a 4.25% interest rate suddenly becomes out of reach when rates jump to 5.75%.   The same $5,000 monthly payment now only gets you a $870,000 house.   What’s the take away ?

Interest rates are going up, if you’re going to buy, this is not the time to sit on the fence.  relaxed
If you’re looking to sell it’s not as black & white.   It’s possible your buyer pool will shrink as rates go up.  It’s also possible more buyers will drop down to your price point as higher end homes become less affordable.  That’s when you’ll want to talk to a professional about the pricing and marketing of your home

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