Apr. 3rd, 2023
Interest Rates and Their Impact on Home Ownership Market fluctuations have given us interest rates as low as 3% in recent years, but interest rates at around 5 to 6%—or even higher—shouldn’t stop anyone from buying. Interest rates impact affordability. As an example, the Motley Fool website showed how large a loan a borrower could obtain for a $1,025 monthly payment, given various interest rates. Here’s what happens to borrowing power with just a 1% increase in interest rates: 4.35%: $205,959 5.35%: $183,608 The rule of thumb, Motley reported, is that each quarter point swing in interest rates changes the amount a borrower can borrow by about 3%, so a 1% increase would reduce the borrower’s borrowing power by a whopping 12%…