More than 1 in 4 renters are planning to buy a home in the next two years according to recent study commissioned by The Mortgage Group (TMG). This could translate to about 12% growth in ownership. Of those surveyed, more than 54% said they would likely buy sooner if they expected interest rates to rise 2% or more in the next year. While the fear of future rate hikes often drives consumers psychology, a budding homebuyer may also want to consider:
- Size of down payment and emergency fund (there is nothing like being house poor i.e. all income money wrapped up in home expense)
- The likely hood of rates rising any time soon (if they do not as many expect, this permits more time to save down payment and closing costs)
- The possibility that home prices may fall. A 10% drop would offset a 2% increase in mortgage rates.