U.S. tax deal squeezes potential home buyers.


The unintentional consequences of the political compromise struck by President Obama and Congress is that mortgage rates are moving higher. This is due to the fact that investors in the bond market worry that the tax deal announced on Monday evening by the President will inflate further the ballooning U.S. deficit. To put this in perspective, the same buyer that qualified for a mortgage with October rates who was able to purchase a home for $400,000 would now only be able to purchase a home for $360,000 due to the increase in rates by approximately .50% over the last few weeks.

As the economy continues to show signs of improvement in the labor market, it is more likely that mortgage rates will continue to move higher.

If you are selling your home, now is the time to price it right. The pressure to lower your price will only continue to mount as the rates move higher and fewer buyers can afford your home.

If you are a buyer, now is the time to commit to a purchase. Not doing so may result in a further squeeze on the size of the home you can afford.

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