Most people buying homes still borrow money in the form of a mortgage. This is why it is important to home buyers that interest rates on home mortgages have been rising, and many economists think they will continue to rise. What impact will this have on households wanting to purchase a house or other ownership property?
- one impact will be that the comparison of fixed rates vs. adjustable rates will become more important
- if expect to stay in dwelling along time – 10 years or more – probably best to go with fixed rate
- else adjustable rate – particularly with a multi year fixed period – may be best – likely see the use of these to rise
- for overall buying market, higher interest rates alone are usually bad
- but if strong job growth continues, wages rise, and home value continue to increase, these could counteract the effect of the higher rates