An increase in mortgage rates shouldn't affect home buyers
Posted on Tuesday, June 25, 2013 at 3:27:08 PM
Changes within the Federal Reserve are coming soon, and they may result in rising mortgage rates. While this might sound like bad news. this isn't too great of a concern for home buyers interested in residential financing, according to a Bloomberg report.
The average interest rate for a 30-year fixed mortgage is now at 4.25 percent, which is nearly a full percent higher than it was in May, according to the report. While this trend is concerning, it is important to remember that interest rates are still historically low.
Mortgage rates are constantly changing as the economy changes, and home buyers shouldn't over-react to fluctuations in rates. The effect the recent increase has had on mortgage rates is small, only adding about $40 every month for every $100,000 in home price over the span of a 30-year fixed mortgage, according to the Bloomberg report.
While home prices are rising, most people can still afford the residential financing needed to buy a home, the report stated. Many rate changes are caused by inflation, in addition to adjustments made by the Federal Reserve. Not all increases signal bad times ahead.
Currently, any change by the Federal Reserve shouldn't have a major effect on residential financing, and it is still a good time to buy.