As a seller, you will be most concerned about “short-term price’” – where home values are headed over the next six months. As a buyer, however, you must not be concerned about price, but instead about the “long-term cost” of the home.
The Mortgage Bankers Association (MBA), the National Association of Realtors (NAR) and Freddie Mac all project that mortgage interest rates will increase by this time next year. According to CoreLogic’s most recent Home Price Index Report, home prices will appreciate by 4.7 percent over the next 12 months.
What Does This Mean as a Buyer?
If home prices appreciate by the 4.7 percent predicted by CoreLogic over the next 12 months, here is a simple demonstration of the impact an increase in interest rate would have on the mortgage payment of a home selling for approximately $250,000 today: