For the fourteenth time this year, mortgage rates have hit a new low! The 30-year fixed-rate mortgage is now at 2.71%. While this is good news for buyers, purchasing power has been diminishing due to home prices rising. Higher prices reflect basic Economics 101: When supply is low and demand is high, prices usually go up. Remember, for every 1% increase in rates, your purchasing power decreases 10%. Put another way, If prices go up 10%, you need a decrease in interest of 1% to retain the same purchasing power (all other things being equal). With interest rates already this low, it seems unlikely they’ll go drastically lower.
Read the Realtor® magazine article.