During the past 12 months the prime interest rate has increased from 3.75% to 5.15%. This has created a significant decrease in the buying power of new homeowners. As mortgage rates go up, the cost of borrowing increases. This tends to have a negative impact on the real estate market regarding the sale of residential real estate.
Cap on Real Estate Tax Deductions
The new Federal Tax Law now in effect in 2019 provides a $10,000.00 cap on the deduction homeowners can take on real estate taxes. This is having a significant negative impact on the real estate market in New York. This is especially true for homes at the higher end of the real estate market that have real estate taxes greater than $10,000.00. Nassau County on Long Island has seen a significant slowdown in the sale of homes with significant real estate taxes.
Adjustable Rate Mortgages (ARMs)
The rising interest rates are causing more homeowners to take adjustable rate mortgages instead of fixed rate mortgages. Adjustable rate mortgages often start very low but go up over time. This may increase the number of foreclosures among those homeowners in the future.
Elliot S. Schlissel, Esq. is a foreclosure lawyer. He helps his clients fight foreclosure lawsuits and obtain mortgage modifications. He has been assisting homeowners throughout the Metropolitan New York area regarding foreclosures for more than 45 years. He can be reached for a free consultation at 800-344-6431 or e-mailed at Elliot@sdnylaw.com.
