How are low interest rates affecting affordability in our real estate market? I invited loan officer Brad Hacker from Benchmark Mortgage to join me for today’s video to answer that question. Brad has been in the business for 18 years, and I’ve done plenty of deals with him, so he’s the right person to address this topic.
According to Brad, the rapid rise in home appreciation we’ve seen lately is great for homeowners, but at the same time, these low interest rates have helped offset this rise in home values. Even though property values are going up, buyers can buy the same houses for the same amount of money, which is really good for the market.
If you’re thinking about waiting for prices to go down to buy, Brad thinks that’s a questionable decision. Due to the low-inventory environment we’re in, it looks like prices will keep rising. As the economy returns to normal, interest rates will return to normal as well. This means that not only will houses be more expensive based on appreciation, but the cost of owning those houses will be so much higher because rates will be about 1% to 1.25% higher than they are now. Pre-pandemic rates were around 4.5%, so there’s a lot of buying power in that gap.
“The bottom line is, it’s still a great time to be borrowing money for a home.”
Although rates have ticked up compared to where they were in the heat of the pandemic, if you look at the situation from a historical perspective, any rate that starts in the 4% range is still a great interest rate. My first interest rate was in the 7% range, while Brad’s was 6.875%. The highest interest rate ever recorded was 18.625%, but our current rates are still in the 3% range.
The bottom line is, it’s still a great time to be borrowing money for a home, and it’s exciting to see inventory increase a bit so we can perhaps get rid of this backlog of buyers.
If you’d like to know more about this topic, you can give Brad a call at (859) 977-5239. If you have any real estate questions for me, feel free to give me a call as well. I’d love to hear from you.
