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How Low-Interest Rates Affect Property Values in Greenwich

If you’re thinking of buying a home, now is the time in Greenwich, CT!

Here’s why: Increased affordability for buyers. Low-interest rates offer real savings.

Interest rates for mortgages are at a two-year low right now. Currently, the 30-year fixed-rate mortgage is averaging 3.82%, which is the lowest point it’s hit since September 2017, according to Freddie Mac. With more homeowners eager to put their properties on the market, inventory has gone up in Greenwich, CT.

This has translated into more options and more negotiating power for home buyers.

If you are in the market to buy there has never been a better time in Greenwich, CT.

Low-interest rates increase affordability for home buyers

With lower interest rates, home buyers are going to be able to afford a more expensive home in the Greenwich, CT area.

Let’s walk through an example: 4% vs. 5% interest rate 

If you want a 4% rate on a 30-year fixed mortgage on a home worth $400,000, your monthly mortgage payment would be $1,900. But if you only qualified for a 5% rate on a 30-year fixed mortgage, your monthly payment would rise to $2,138.

A 1% increase in interest raises your monthly payments by $238, or roughly 13%. So, what does this mean for homebuyers?

From a home buyer’s perspective, as mortgage rates increase, affordability goes down. If you want to qualify for a $400,000 mortgage at 4% interest, but at 5% interest, lenders can only offer you a $355,000 loan based on your qualifications. A 1% increase in mortgage interest decreases your purchasing power by $45,000!

Did you know?
According to the latest Gallup poll, owning a home—whether in Greenwich, Connecticut or anywhere else in the U.S.—is Americans’ most trusted long-term way to grow wealth.

How mortgage interest rates are determined

Mortgage interest rates fluctuate depending on broader economic factors and investment activity too. The secondary market also plays an important role. Freddie Mac and Fannie Mae bundle mortgage loans and then try and sell them to investors looking to turn a profit. Whatever interest rate these investors are willing to buy the mortgage-backed securities for dictates what rates lenders can set on their loans. This drives up or down the average monthly interest rates on mortgage loans.

Securing a mortgage with a broker or lender

For many, securing a mortgage can be the most stressful part of home buying. You have to get your finances in shape, review your credit score, and shop around for the best rate when applying for a loan. You can choose to work with a direct lender or a mortgage broker.

Did you know?
Low interest rates make for a competitive market for brokers. You should shop around different mortgage brokers and lenders to get the most competitive rate.

You affect the interest rates offered to you

The exact rates you’re offered by a broker also depends on your own financial situation. Things like your credit history, debts, credit score, annual income, and other factors all play a role in what rates a lender can give you.

Considerations a lender takes into account

  • Credit score
  • Cash reserves and assets
  • Income and employment history
  • Repayment history and any collections, bankruptcies or other financial events
  • Debts
  • Down payment
  • Property location
  • Loan type, term, and amount

 Generally, the riskier you are as a borrower, and the more money you take out, the higher your rate will be.

The bottom line:

An easy way to research current interest rates is to use a mortgage calculator. Just keep in mind that buying a home and trying to decipher interest rates can be very confusing to the untrained eye. Don’t hesitate to ask your real estate agent about different brokers and lenders in their network.

Looking at homes in Greenwich, CT area, or just interested in knowing more about interest rates and how they affect home buying? Comment below, call or schedule a meeting with Longo Realty Group today.

Note: The home featured in this blog is currently available for purchase. $935,000, 3 bedrooms. Located in Greenwich, CT.

Located on a coveted street just steps from Greenwich Avenue and a short walk to the train. The sun-filled first floor offers an open floor plan with high ceilings, tastefully updated kitchen, and a full bathroom, all wrapped with an incredibly welcoming front porch. The upstairs includes 3 well-sized bedrooms and a full bathroom w/ attic access.