"My House Could Sell For Less?" - How Changing Interest Rates Can Impact Your Sale Price

If you are planning to sell your home, here is what you need to know about interest rates.*

Increasing interest rates can mean that your home could sell for less.

Why?

Increasing rates have the opposite impact on buyer affordability. 

I.E., Rate goes up - mortgage payment goes up - your house price becomes "less affordable". 

If we look at an example of someone that was approved for a 5 year fixed rate mortgage over 25 years at 2.70% (for context: a sample 'sale' rate we saw during the pandemic and as late as early 2022), a $450,000 mortgage would have a monthly payment of $2,061**.

That same mortgage today, at 4.59%, would have a monthly payment of $2,513 per month. A difference of $452/month.

If that buyer wanted the same $2,061 payment, they would now be looking at a mortgage of $369,000. A difference of $81,000.

*Pause for dramatic effect*

Eye opening?

Yes. 

Sky falling? 

No. 

It is important to note that the rates offered during the pandemic were SALE RATES and purposely discounted to HISTORIC LOWS to engage the economy during times of "unprecedented" economic uncertainty.

BUT as a seller, it is very important to understand the impact that increasing interest rates have on affordability, so you can understand how it could impact your sale price. 

A great realtor will be able to coach you on appropriate suggested list prices and - if needed - price reduction strategies as we continue to see the impact of interest rates here in our local market. 

"So... are we doomed?"

Nope.

Average price in St. John's metro is the highest it's been in the last 10 years***. So if you're selling your house for less TODAY then you would have in the spring... you're likely still selling it for higher than you would have historically in the last 10 years. 

So, chin up and lets get you moving!

*Note: I am NOT a mortgage professional and this information is for example purposes only. For professional mortgage advice make sure to contact a mortgage specialist.

**Source: Scotiabank online mortgage calculator 

***Source: NLAR, Matrix, Average Price, Single family homes, St. John's Metro, Sep 26 2022

Nicole Darbaz, REALTOR®

Your Trusted, St. John’s Metro, Real Estate Expert

Darbaz Real Estate Group

Keller Williams Platinum Realty

709-691-1373

NicoleDarbaz@kw.com

MLS®