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Rising Mortgage Rates May Cause Homebuyers More than Just Headaches

Rising Mortgage Rates May Cause Homebuyers More than Just Headaches

Approximately 59% of current homeowners wish they better understood the details of their mortgage, but new homebuyers may not even have that luxury if they don’t settle on a home in the immediate future. According to Bankrate.com, mortgage interest rates reached a new high at the end of 2016.

As of December 21 2016, the national rate for a 30-year, fixed-rate mortgage was 4.17%, which marks one of the highest interest rates for 2016. According to sales figures from the Northern Arizona Multiple Listing Service, that interest could accumulate into more than most homeowners could handle.

The 4.17% interest rate from December 2016 marks a 7% increase from the rate in November 2015. Lisa Paffrath, owner and broker of Grand View North Realty, reported that interest rates on mortgages have been on the rise since the election. The nature of the election caused shifts in the stock market, which in turn had an affect on mortgage rates.

Additional data from Bankrate.com reveals that rates have been steadily increasing since before the election results were in. The website’s survey at the end of September 2016 showed that the interest rate was approximately 3.54%.

Paffrath explained that higher mortgage rates mean more than a higher interest bill tacked onto your mortgage. She said that higher interest rates actually diminish a person’s purchasing power. Other realtors concluded that for approximately every quarter of a point increase in interest rate, a buyer loses up to $10,000 of their purchase power.

While homeowners and homebuyers alike have been worried about this trend, some good news finally came in last week. After nine straight weeks leading to the 2016 high for mortgage rates, there was a decrease in the first week of January 2017. The interest on 30-year, fixed-rate loans decreased from 4.32% to 4.20% as of January 6 2017.

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