The real estate market in the United States continues to be more favorable for sellers than for buyers. Interest rates are starting to rise, and the supply of homes on the market remains low.
However, buyers should not panic just yet. Although the Fed raised the country’s interest rates by 0.5% last month, mortgage rates are not set by the Fed, only affected by it. Last month’s increase was widely anticipated, meaning the market has already absorbed the change. Therefore, many experts do not see real estate market interest rates rising in the coming weeks.
Moreover, mortgage interest rates remain relatively low, and many experts do not expect them to rise beyond 5% per year in 2017. Last month, the average interest rate for a 30-year fixed mortgage was 4.21%. A year ago, it was 3.68%. At current rates, a buyer will pay $57 more per month than a year ago for a home valued at $235,000 with a 20% down payment.
This increase may not delay the dream of homeownership for many buyers, but it could become a barrier for those purchasing in more expensive neighborhoods or who are at the limit of their buying capacity.
So far, the Central Bank is expected to raise interest rates three times this year. If its actions become more aggressive, mortgage interest rates could rise more significantly.