Interest Rates on the Rise

By ANTHONY MARGULEAS | Special to the Palisadian-Post

As we jump into the second half of the year, interest rates have continued to slowly rise, costing homebuyers some of their power.

Last year’s interest rates were the lowest they’ve ever been, averaging a mere 2.5% and allowing many homebuyers to get more while staying within their budget. Over the last eight weeks, however, we’ve seen those numbers climb over 39%, a significant financial implication, which happens to also be the largest percentage increase we have ever seen.

For example, in 2021, a buyer with the ability to pay $2,500 per month toward their mortgage would have the ability to purchase a home for an average of $517,500. With the recent increase in mortgage rates, that same buyer would lose approximately $120,000 in buying power, dropping their purchasing power to $399,750, which can make a significant difference in the home, the community and the buyer’s satisfaction.

Though the average 5.1% rates have calmed down the real estate market slightly, some buyers are finding ways to keep their mortgage rates lower, or slide under that 5.1% mark. These options include trading a 30-year fixed rate mortgage for a five- or seven-year fixed rate mortgage, which then rolls over to an adjustable rate mortgage. Other buyers are asking the sellers to carry a seller’s note.

In addition, higher down payments and buying points that go directly to your mortgage, purchased by either you or the seller, are also available options. All of these enable you to lower your mortgage rate, gain equity in your home, and still keep your buying power strong and your mortgage under the average.

With so many buyers still looking and the supply still lower than demand, the change in interest rates has only slowed the bidding wars slightly. The market is still going strong and doesn’t seem to be forecasted to slow anytime soon. The supply just isn’t enough to match demand, and it doesn’t look like it will get there anytime soon.

Anthony Marguleas, the founder of Amalfi Estates, has sold $2 billion in properties and was selected by the Wall Street Journal as one of the top 10 teams in the country out of 1.7 million agents. If you are thinking of buying a home or selling your own, contact Marguleas at 310-293-9280 or anthony@amalfiestates.com.