National home prices have increased by 5.4% since this time last year. Over that same time period, interest rates have remained near historic lows which has allowed many buyers to enter the market and lock in low rates.
As a seller, you will likely be most concerned about “short-term price” – where home values are header over the next six to 12 months. As a buyer, however, you must not be concerned only about price but also about the “long-term cost” of the home.
The Mortgage Bankers Association (MBA), Freddie Mac, and Fannie Mae all project that mortgage interest rates will increase by this time next year. According to a recent Home Price Insights Report from real estate data analyst CoreLogic, home prices on a national level will appreciate by 4.8% over the next 12 months.
What Does This Mean as a Buyer?
If home prices appreciate by 4.8% over the next twelve months as predicted by CoreLogic, here is a simple demonstration of the impact that an increase in interest rate would have on the mortgage payment of a home selling for approximately $250,000 today: