Housingwire.com recently published an article (read the article here) commenting on the correlation these lower mortgage rates are likely to have on the increase in housing purchase prices.
This is a simple function of supply and demand. As the demand for housing increases due to lower mortgage rates making housing more affordable, the supply of homes decreases forcing home prices higher.
Capital Economics reported, “Other things equal, with a given income and debt-to-income (DTI) ratio, a lower interest rate raises the amount a household can spend on a home.”
Housingwire.com reports, “At the beginning of the year, Capital Economics originally predicted a rise in prices of 2% over 2019. The economic research consultancy admits it did not foresee the 30-year rate dropping below 4% this year. With the magnitude of the drop, Capital Economics is now edging home prices up a percentage point from its original forecast.”
Now is the time to take advantage of lower rates and to make sure you are buying your next investment ASAP so that you can benefit from the appreciation increases.
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