Wednesday, December 2, 2015 / by Tom Nickley
How Interest Rates Affect Orlando Buyers
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The rise in interest rates can affect your ability to buy a home in the Orlando area. Although interest rates are historically low around 4% now, the Fed will meet in mid-December. Their most important topic? Interest rates! Across the board, industry professionals agree the Fed will most likely increase interest rates at this meeting. No one knows by how much exactly.
However, even slight increases can drastically affect purchasing power. Let’s say there’s a one-percent increase hypothetically. Although it doesn’t seem like much on the surface, a 1% increase from 4% to 5% translates to a 25% interest rate increase. A 1% increase in interest rates will decrease purchasing power by 11%. For example, if you could previously purchase a $200,00 home, now you only qualify for a $178,000 with a rate hike. It takes you from one price range of homes to a different bracket.
What does this mean for buyers and sellers in the central Florida market? It means if you’re on the fence, act now. Take advantage of low interest rates before they increase. Now is a perfect time to list or purchase.
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