Over the past several years home interest rates have steadily increased, and experts believe the trend is going to continue in 2019.
Subsequently, it is important for home buyers to fully understand the interest rate projections for 2019 to ensure they purchase a home they can truly afford and avoid paying more each month on their mortgage than they originally anticipated.
The following is everything home buyers need to know about interest rates, including the latest interest rate projections for 2019.
Understanding Interest Rates
An interest rate is a rate a lender charges on a loan for a mortgage. There are various that may cause an interest rate to fluctuate, but in most cases an interest rate is fairly predictable and stays close to the average interest rate.
To fully understand interest rates and how they affect the amount a home buyer can afford to take out on a loan, let’s look at an example.
Let’s say a home buyer is able to spend $1,500 per month on a mortgage(not including other fees and taxes). With a 4.6% interest rate, the home buyer can afford to purchase a $300,000 home, whereas they can only spend $290,000 for a 5.0% interest rate and $280,000 for a 5.4% interest rate.
Interest Rate Projections for 2019
The average interest rate for 2018 stayed around 4.6, fluctuating slightly from month to month.
In 2019, the interest rate is projected to rise once again. Most experts are predicting the average interest rate for a mortgage to land between 5.1% and 5.3%, and interest rates are expected to reach as high as 5.5% at certain points of the year.
It is important to factor in rising interest rates when purchasing a home. Without considering rising interest rates, home buyers are at risk of purchasing a home that they simply cannot afford. However, by considering the interest rate projections in 2019, home buyers can ensure they purchase a home at the right time and one that they can afford.
What Rising Interest Rates Mean
Rising interest rates are often a result of inflation brought on by a thriving economy. The main indicator of a rising interest rate is rising wage growth, which according to the Bureau of Labor Statistics has reached its highest point since 2000.
Rising interest rates mean you are likely to pay more for a home a year from now then you will have to at this moment in time. In other words, a $350,000 home will require a higher monthly payment once interest rates rise than they do at this exact moment in time.
In order to avoid paying higher interest rates on your property, consider purchasing home sooner rather than later in order to avoid the inevitable rise of interest rates that is to come.
EXIT Realty Bob Lamb & Associates is Murfreesboro’s most innovative real estate team.
EXIT Realty Bob Lamb & Associates
2630 Memorial Blvd, Murfreesboro, TN 37129