The beginning of the end?
When the Fed chairman talks…people panic. And that panic has resulted in mortgage rates spiking 60 basis points in the last 3 weeks alone.
Wells Fargo & Co., the largest U.S. mortgage lender, is offering 30-year fixed-rate loans at 4.5 percent, according to its website, up from 4.13 percent on June 18 and 3.88 percent on May 22, when comments by Bernanke to lawmakers and the release of the minutes of the last Fed meeting caused bonds to plummet.
Strange as it may seem, most buyers decide on what price range of home to buy in the same way car buyers shop… NOT by the price but my the monthly payment that comes along with that purchase. And the monthly payments just went up.
As the mortgage rates creep up…the inverse is happening to purchasing power. Take a look at the Home Affordability chart below:
So, "instead of being able to afford a $425K house, the average consumer can buy a $395K house."
Fortunately for the buyer, but unfortunately for the seller, it will probably be the same house.
As always…trying to give my readers the REAL story…thanks for reading.
Steve Jackson…561.602.1258
