How do interest rates impact your buying power?

Many of us are on the fence about whether we should buy and/or sell in our current market, and for good reason…we’ve heard that values are down and foreclosures are up. It’s a scary world out there.

Fortunately, that’s only part of the story. The bigger, more exciting news is that our historically low interest rates coupled with affordable home prices have created an incredible opportunity to buy. How incredible? Let’s just say we may never see this kind of buying power again in our lifetimes. Why is this?

Interest rates directly affect the amount of house you can afford. For example, someone who qualifies for a $700,000 house at a 5% interest rate would only be able to afford a $564,000 house if rates went up to 7%. Over the past 30 years, the average conforming interest rate was 8.998%. As of June 1st, 2011 it was 4.5%.

With interest rates predicted to rise in mid-summer, now just may be the best time to jump off the fence and invest in your future

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This article is not intended as an offer to extend credit nor a commitment to lend. The loan interest rates, fees and terms presented here are for illustrating purposes only and may not be currently available. Payment estimates courtesy of Windermere Mortgage Services.

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