We talk daily to potential homebuyers in the Portsmouth New Hampshire and other NH and southern Maine Seacoast areas. One common question we get is: “Do you think prices have hit bottom yet?”
Not having a crystal ball we can’t answer that question accurately nor can anyone else. One thing we can say with accuracy is that even if home prices soften a little more and interest rates rise; your COSTS of buying and owning a home may be higher in the future than if you went ahead and bought now.
Our rationale is this. We know for a fact what homes are priced at today. We also know for a fact what Portsmouth NH interest rates and housing costs are today. We don’t know what may or may not happen tomorrow.
The mortgage rate you get can have a dramatic impact on your overall costs of owning a home. Recently we’ve been hearing that mortgage rates could begin to rise.
This chart from HSH Mortgage shows the recent rates for the benchmark 30 year fixed rate mortgage.
And Lawrence Yun, Chief Economist for our National Association Of REALTORS recently said: “Mortgage rates will be starting to rise. From the 3.9 to 4.0 percent average rate in the past five months on a 30-year fixed mortgage, the new rates will soon be in the range of 4.3 to 4.6 percent”
Dr. Yun explains his logic here.
We do not attempt to predict future interest rates. We leave that up to the experts in the field. However, we want our readers to understand the potential impact on the cost of purchasing a home if they do rise. Here is a simple table that shows, even if the PRICE of a home softens, the COST of a home could increase.
As you can see from the example above, your COST of owning a home may increase by several hundred dollars a month if interest rates rise only a percent or two. Many purchasers think they should wait until they are sure that prices have hit bottom. Deciding whether or not to wait should be determined by where the COST of a home is headed.
Based on the graph above and a $360,000 mortgage, your monthly principal and interest payment (P&I) at a 3.5% interest rate would be $1,617. At a 4% interest rate it would be $1,719, and if the rates jumped to 5% your monthly P & I would jump to $1,933; a $316 increase in your cost of Portsmouth NH homeownership.
Based on those numbers can you afford to take a chance on waiting and roll the dice that interest rates will remain where they are?
Visit our website at NewHampshireMaineRealEstate.com to see all the Portsmouth NH, Seacoast areas and southern Maine listings for sale. You can also sign up to receive free mail updates for hot new listings, price reductions, and other listing information.
Questions? My partner Ann Cummings and I are happy to talk with you by phone, email, text, or we welcome in person visits to our startup office at RE/MAX Coast To Coast Properties in Portsmouth NH. Just call or email for an appointment. 603-431-1111, extension 3839 for Ann, 3801 for Jim
We love living, working, and playing in Portsmouth NH and the NH Seacoast including southern Maine; we think you will too. Contact us soon.