Increasing Interest Rates May Get Buyers Off the Fence

Sitting-On-The-Fence-300Though borrowing costs are increasing as interest rates have lifted from their historical lows, some real estate professionals believe the rise may boost home sales.

“It will get people sitting on the fence to decide, ‘We better do something or it’s going to cost us money,” says Margaret Dixon, a real estate sales associate in Tennessee.

Fear of Rising Interest Rates May Get Buyers Off the Fence

At the end of 2012, 30-year fixed-rate mortgages averaged 3.52 percent. Last week, Freddie Mac reported that 30-year rates averaged 4.47 percent.

A 1 percent increase usually lands around $30,000 in buying power. That’s the difference between a starter home and a bigger home – or a bonus room. Higher interest rates, along with higher home prices, may prompt more home buyers to act quickly before costs rise any more.

Buyers realize the house of their dreams may never be cheaper than it is today, It creates a sense of urgency.

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