Interest rates for home mortgages have started their climb back up. Today in the Austin area a new mortgage will be over 5% - probably closer to 5.25%. That is still historically low but compared to the 4.5% we have been looking at for a long time it feels high. So cheap money is fading away and with it purchasing power.

$100k loan:

• 4.5% interest - $506.00 monthly payment of principal and interest
• 5.25% interest - $552.00 monthly payment of principal and interest

So if $506 is your budget, now all you can borrow is: $91,750. Your purchasing power went down by $8,250.

Here's another interesting note: in Austin the number of homes sold is going up and the average price is also going up. Austin is looking good!

John Blackburn