Wanted to share this graph from Tim Lucas at mymortgageinsider.com

Buying power

As you can see a 1% rise in interest rates = 11% drop in buying power. So as an example if currently you are a buyer and pre-approved for $250,000 at 4.5% if interest rates rose to 5.5% you would drop to $222,500 for your pre-approval and your payment to remain the same. The kind of house you can afford now could be out of reach the longer you wait.

Will rates raise this year? No one can say for sure, but the talking heads all say they will.. and as everything in life all good things come to an end. Below is a graph over the last year showing the rate trend in Washington. January of last year the rate was 3.68% this January it is 4.33% If you had waited a year to buy using the same $250,000 approval you would now only be approved for $230,000. Couple that with the fact that home values have been on the rise and the drop in the type of home you can afford could be even larger.


If you are considering purchasing a home this year in Thurston County, this is just another thing to consider as the year moves on, and maybe push you in the direction of making a move sooner rather than later.

If you are considering selling your home to upgrade to a larger home or different location this may even have a bigger effect on you in two areas.

First – as rates rise you may lose out on buyers who once could qualify to purchase your home but then due to a rise in rates your home becomes out of reach.

Second – it could decrease your buying power on the next home you purchase if rates rise by the time you sell.

As 2014 gets underway these are important things to consider if you are thinking about buying or selling real estate in Thurston County this year.

 Jason Vizzini is a Realtor with Van Dorm Realty in Olympia, WA  as well as main contributor on sellthurston.com He specializes in marketing homes using the web, social media and advanced marketing strategies.