COLORADO SPRINGS, Colorado — The real estate market in Colorado Springs remains extremely competitive despite Wednesday's announcement by the Federal Reserve of a 0.25 percent interest rate increase.
Ann Kidd, Chair of the Pikes Peak Association of Realtors said that the people continue buying homes every day. Historically low inventory has driven the average sale price of a single family home to $450,000.
Kidd believes that rising interest rates will force some buyers out of the market. Right now it's a gentle nudge, Kidd said. However, that nudge can become a push if there's a string of successive rate hikes.
For every 0.25 percent increase in interest, someone buying that $450,000 home can expect to see their loan payment increase by $60 per month. Over the life of a 30-year mortgage, that extra quarter-percent means $10,000 more in payment.
Jennifer Johanns, a Loan Consultant with Loan Depot, said it's important for consumers to understand that many variable affect interest rates on home loans including the 10-year Treasury Rate, supply and demand, and inflation.
Mortgage interest rates have been climbing since hitting record-setting lows during the pandemic. Johanns believes the impact of Wednesday's move by the Fed may already be "baked-in" to the current rates on the market.
Johanns thinks consumers are more likely to experience the impact of Wednesday's rate hike on short-term and revolving debts, like credit card debts.
The silver-lining with the current real estate market is that many homeowners are now sitting on record levels of home equity thanks to the surge in home values. Johanns said it may be a good time for consumers to consider consolidating their high-interest credit card debts into a home equity loan.
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