Interest rates started grabbing headlines 3 weeks ago when they began moving up markedly in a very short time span. 

According to the Freddie Mac Weekly Survey released May 23, rates for a 30 year fixed mortgage have gone up from 3.42% May 9th to 4.37 as of 8/1/13

Interest rate fluctuations have a huge impact on home buyers. For instance a month ago, when the average conventional rate was at 3.25%, a monthly payment on a $350,000 loan would be $ 1,523. With today’s rate of 4.0%, the monthly loan would jump to $1,671, a difference of $148 a month.  Combine this with the valley market that is pushing up values, and affordability is becoming a new issue with buyers.

Does this mean that rising prices will stall automatically to compensate for the rising interest rates?  In our opinion, no.  Although logic would say that prices and interest rates create affordability for an area (in addition to the average wages for an area) and therefore must affect each other.  History, however,  says they don’t.  What it does mean is that buyers waiting to buy should move quickly to lock in their interest rate on a home.  As we have seen, when rates move they move quickly. For those buyers who need reassurance, they should note the valley is still one of the best buys in the country for a large metropolitan area and interest rates are still in the range of historic lows.  So even a little bad news is not really that bad.