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Interested in Interest Rates? Novato Real Estate Update (VIDEO)

Interested in Interest Rates? Novato Real Estate Update (VIDEO)

Interests In Rates

Mortgage interest rates are predicted to rise, possibly to 4%, by the end of 2022. How does the threat – and reality – of rising rates impact the Novato housing market? What does it mean for buyers and sellers? Realtor Kevin McGinnis with Team McGinnis explains in this video.

Novato homeowners, the value of your home right now is the highest it’s ever been!

We hear a lot about inflation these days. And we don’t just hear about it, we’re all living it. Whether it’s at the gas pump, or the grocery store, most of us can feel inflation’s effects in our everyday lives.

So, to tamp down inflation, the Federal Reserve is expected to raise interest rates this year, and quite possibly more than once. The idea is that high, high demand is driving inflation, and couple that with some lingering supply chain issues related to COVID, and prices have been climbing not just here, but around the world.

By raising rates, borrowing is more expensive, and that historically decreases demand. If it costs more to borrow, you may hesitate to make that purchase on credit because it’s more expensive to borrow.

So, how does that relate to the housing market? When mortgage interest rates go up, home buyers have less buying power.

Let’s say you have a 30-year mortgage of $1 million, not an uncommon sight around here. The median price of a single-family home here in Novato is $1.2 million, so a million dollar mortgage is common.

If that mortgage is at 3%, your monthly payment is about $4,216. If rates go up to 4%, your monthly payment goes up by $558 a month to $4,774. One small step further, let’s say rates go to 4.25%. The monthly payment is now $4,919 or more than $700 more than at 3%. That’s real money.

If that happens, one of 3 things will occur:

  1. There will be buyers out there who just don’t care. Either they have enough to cover it, or their down payment is large enough so their mortgage is smaller, so they don’t feel it as much.
  2. There will be some whose buying power is decreased. Instead of that million dollar mortgage, maybe now it’s $900,000. They can’t buy as much house, but they’re still in the market.
  3. Buyers who just throw up their hands and say I’m not playing this game. Folks who say paying 4 percent or so is just too much.

So if you’re a seller watching this, what do you do? Let’s say you want to sell your house, but maybe you are thinking of waiting until late spring or summer. If you’re able, sell it now. Not next month, or in the late spring, sell now!

Buyers also know that rates are rising, and they’re not waiting.

So the bottom line is this: if you’re considering selling but wanting to wait, you’re much better off doing that sooner rather than later.

If you’re considering selling, or want to know the new value of your house, please contact us today. 415.725.1911 or teammcginnis(at)compass(dotted)com

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