Interest Rates and How They Affect a Purchase
It’s no secret that interest rates can affect a buyer’s purchase power. As interest rates fluctuate, so does the market. How much can a rising interest rate change the affordability of a home? For every .5% increase in interest rate, your ability to get approved for the home that you want decreases by 5%. So, if you were approved for a $500,000 loan, and interest rates when up a half percent, you are now approved for a $475,000 loan. In this Denver market where prices are constantly increasing, $25,000 can make a huge difference in your future home aspirations.
The good news is that interest rates have taken a dip recently. We are currently hovering around a 4.5-4.75% (depending on down payment, credit score, etc…). This is a vast improvement from the rates that we saw at the end of 2018.
The craziness of the “spring market” has yet to take hold, interest rates are still historically low, and now may be a good time to take a look if you are an investor or a buyer that was afraid of the aggressive Denver market. We are seeing longer days on market, more price reductions, and buyers that were formerly being “priced out” of their dream homes are finding the current conditions to be a bit more to their liking.
When you are ready to explore what this means for you, give us a shout!
