There seems to be so much financial and economic jargon thrown around when it comes to the real estate industry, but breaking down such language is integral to making financially sound decisions. In order to ensure you’re making the best financial decisions for you when it comes to buying a home, it’s important to make these concepts as accessible and comprehensible as possible. Transparency throughout the process from realtor to a buyer or seller is incredibly valued. To help better understand what different factors can affect the buying market, one needs to familiarize themselves with how the market itself works and responds to external factors. Two of these concepts we will explore today are mortgage and interest rates, and how the two influence home buying.
→ INTEREST RATES
Interest rates determine how much money needs to be borrowed in order to buy a property, and can drive up real estate value. Additionally, when there are lower interest rates, this tends to increase demand for a property, therefore driving up prices. On the other hand, higher interest rates usually result in the opposite.
→ MORTGAGE RATES
There are two main kinds of mortgage rates: fixed rate and adjustable-rate (ARM) mortgages.
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Popular methods to potentially gauge the future direction of interest rates include studying the yield curve, keeping tabs on the 10-year Treasury bond yield, and paying close attention to Fed monetary policy
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Higher interest rates mean that the same amount of money has a lower purchasing power. In order to try to combat high inflation, as if this summer, the Federal Reserve “hiked interest rates by three quarters of a percent, the fourth time the Fed has jacked up rates this year, a fast and furious pace the country has not seen since the late 1980s” (NPR).
If you’re ready to buy a home, don’t wait until rates climb even higher. Along with information on how mortgage and interest rates affect the market, should you have a need for real estate in the North Atlanta area, Lucido Global with Keller Williams North Atlanta is here to answer any questions or concerns you may have. Give us a call at 404-242-9908 or email us at GinaSharma@LucidoGlobal.com .