Rising interest rates aren’t always a bad thing because it means the economy is doing well leading to pay raises and bonuses. While higher interest rates won’t affect whether or not you can borrow, it will affect the rate at which you can borrow.
Why are Interest Rates Rising?
There are multiple factors that play into the rising interest rates for homebuyers.
- The U.S. economy is doing well
- Wages are rising
- Taxes were cut
All of these factors cause inflation to rise, thereby causing the Federal Reserve to raise rates in order to keep prices stable.
What Does it Mean for You?
Inventory has dropped, making it harder for people to buy a home because there is so little to choose from and prices are high. The interest rates make it even more difficult if you can’t afford the monthly payments on your mortgage. Some homebuyers are looking more fervently for a home, while others are waiting for prices and interest rates to drop again. The market will eventually drop again, making homes for affordable.