As I am not a mortgage broker, I cannot go into full details of the mortgage rates and such.
But I will tell you as of right now the mortgage rate for a 30-year loan is now 5%, compared to 3.25% a few months ago. What does this mean?
To put it in simpler terms, a $300,000 loan amount at 5% would be $1610 a month!
The same loan amount at 3.25% interest rate would be $1306 a month, a difference of $304!
This is a substantial amount on a loan amount seen just a few months ago!
Does this mean house prices will drop? Will the housing “bubble” burst? In the short run the answer is no.
What are the traits needed to stabilize for prices to also stabilize and/or drop some? With the interest rates being higher, an inventory of homes should build up as well.
Multiple offers will drop down some, as well as bidding over asking price.
It boils down to simple supply and demand.
The market that we are currently in is not a normal one and having an increase in mortgage rates will gradually stabilize the housing market.
If you have any questions, please do not hesitate to call me at 215-630-9363.
PHOTO CAP: Joe Cairo