As a real estate broker at my own business, Pleasant Valley Real Estate, I am constantly crunching numbers. That’s because mortgage interest rates can make or break a real estate transaction. I have been watching interest rates since I worked in my father’s law office, typing up mortgage deeds, a very long time ago. Back in 1972 I was writing 7.74% rates into deeds. Since then I have seen rates go as high as 18% and then seen them plunge to the new all-time lows of the past year—under 3%. WOW!
I remember back in 1994 we were talking about how low the rates were. That was 20 years ago and they were around 5 to 6 %. The description of rates has changed since then, from simply “low interest rates” to the more expressive “historically low interest rates.”
Well, I think historically low interest rates wins the title! But as they say, once you hit bottom there’s no where to go but up. And now those historically low interest rates are starting to do exactly that—go up. I hesitate to use the word “climb” as I don’t think they will change rapidly. “Crawl” is more like it. Whatever the adjective, they are rising, like dough in a bowl, and I believe the historically low interest rates are history. The new rates will likely be in the range of 4.5 – 5%, and I forecast that as the year progresses we will be hitting close to 5%.
While I still believe the best time to buy or sell real estate is when you are ready, if you believe you are ready, the time to act is now. Inventory is good, with a variety of properties on the market, and while we area not experiencing historically low interest rates, they are still impressive, in the low to mid-4% range. I do not think the Federal Reserve is going to rush to raise the rates quickly, but I do think we will definitely begin to see a gentle rise.
If you are a buyer, keep in mind that a change in interest rates upward can dramatically affect what your monthly payment will be, and thus affect what you qualify for in a loan. For example if you are looking for a loan amount of $300,000 at 4.25% over 30 years, that comes to $1,475.82 a month. But change that interest rate to 4.85% and your payment jumps to $1,583.08 a month. That’s an increase of $107 a month, which is nothing to sneeze at!
People think no one moves in Vermont in the winter. However, when you consider that we have six months of winter, you can bet many of our sales occur between November and April. The time to buy or sell is when you are ready, regardless of the season. If the time is right, then the time is right, and the time right now is good!
So, if you’re ready to buy or sell, give me a call at 802-858-9195 or send me an email. I’d love to work with you and crunch some interest rate numbers!
Lea Van Winkle, Owner/Broker