It's been in the news. The Federal Reserve has decided to raise the prime lending rate by 1/4 of a percent (.25). While this shouldn't affect home mortgage rates directly (it mainly applies to the overnight cost of money) it does send a message that the economy will be improving and the banks feel that they can charge more for a home loan.
Home mortgage rates have a direct effect on how much home a Potential Buyer can afford. Since the trend has been a rise in rates, the Backlog of Buyers (ask me to explain who these folks are) is activated & motivated to find their home sooner than later. In other words, those who were thinking about buying a home in the Spring now know that they ll be able to afford a lot less house if they wait for the "traditional" buying season.
Take a look at the info-graphic below to see how much buying power is lost by just a 1% increase in interest rates.
Stated simply, if the interest rate goes up 1%, a buyer is forced to settle for a home worth $40,000.00 less if they hadn't waited.
If you're a Seller, that increase significantly shrinks the pool of Buyers that can afford to buy your home. If there are less people able to afford your home, your Selling Power is diminished as well and you may not be able to get the price you hoped for when you go to sell.
I'm not trying to panic anyone (Buyers or Sellers) by pointing out the obvious downside to waiting 5-6 months to buy or sell your home.
I am just
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