Jason Fallon on What Rising Rates Mean for You
Here’s what Jason Fallon had to say about rising interest rates.
What’s going on with interest rates? You may have heard about them in the news, but what do recent developments mean for you? Today I’m speaking with Jason Fallon of Movement Mortgage to explain rising interest rates and what they mean for our market.
Before the recent hikes, interest rates were at historic lows for years. Why was that?
The main reason that rates were so low for the last few years was the pandemic. The economy was sputtering, and many people lost their jobs. To help spur growth, the Federal Reserve lowered interest rates to free up the flow of capital. This allowed businesses to take favorable loans and homeowners to refinance their mortgages.
Rates have been low for a while. Why are they increasing now?
The economy goes through cycles. Everyone knew rates would have to go up eventually, but things have happened faster than we initially thought because of inflation. Our inflation rate is at a 40-year high, so the Fed is taking drastic measures and raising interest rates quickly to fight it.
Rising rates dramatically affect your buying power.
From January to early April, how much have rates increased?
In early January, rates were in the high 2% range. If your credit was good, you could get a mortgage at 2.875%. As of early April, rates have just passed 5%.
How much does this increase impact someone’s monthly mortgage payment?
If we use a $400,000 loan as an example, the climb from 2.875% to 5% would increase your monthly payment by $488. As you can see, rising rates dramatically affect your buying power.
If someone is considering buying a home, should they jump into the market now or wait?
I would still advise a potential buyer to get into the market now. Rates aren’t done rising yet. If you wait, rates will increase further, and your monthly payment will get even higher. The sooner you jump into the market, the better deal you can get.
I would like to thank Jason once again for speaking with me today. If you have any questions for him, reach out to Jason at [email protected] or call 215.327.2217. In the meantime, don’t hesitate to call or email me with any real estate-related questions. I look forward to hearing from you!