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Real Estate Investing Is Changing In 2023 (Here’s How)
Banks Tighten As Interest Rates Go Up
Real estate investing in America has undergone significant changes in the past few years, with a range of factors influencing the market. One of the most notable factors is interest rates. As of 2023, interest rates for home loans are at around 7%, marking a considerable increase from the previous year’s 3%. This increase has caused a shift in monthly mortgage payments, with potential homebuyers finding it more expensive to purchase a home than in the past.
To understand the impact of the rise in interest rates, let us consider a $300,000 mortgage with a 30-year term. With a 3% interest rate, the monthly payment would be $1,265. However, if the interest rate increases to 7%, the same mortgage would cost $1,996 per month, a 58% increase in monthly payments. This change in the cost of borrowing money has a direct impact on the affordability of housing for many people.
You Read That Right. . . 58% Increase . . .
Banks Tighten
During times of economic downturn or uncertainty, banks may become more risk-averse and tighten up their lending criteria to avoid losses from defaulted loans. While this may help protect the banks’ financial stability, it can have…
