Wow! BofA has a 5% rate right now up to a loan amount of $625,000 for your best buyers. Not bad! That's just a $3355 monthly payment! Do you realize that if rates rise just 1%, that same monthly payment will only borrow $560,000!!! That's a $65,000 loss of buying power, or over 10% of the purchase price. So, if you are not convinced that prices are going to fall another 10%, make your offers now and lock in a fantastic property.
Here'a a quick rule-of-thumb:
Home prices have to drop 10% to offset a 1% rise in the interest rate (when calculated using 30 year amortized payments).
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