By Shelley Sakala, Realtor

In this month’s real estate column, local realtor Shelley Sakala answers a reader’s timely question. North Phoenix resident Kevin asks, “I heard interest rates went up. I was planning to buy a house this year. Should I be worried?”

The Expert Answer
Yes, interest rates have gone up. But I promise things will be okay – eventually.

For those who study the economy (or study their grocery store receipts), the word of the day is inflation. In its simplest form, inflation is the rise in the price of things you buy – like groceries, clothes, cars, and even houses. In an already hot real estate market, this is an even bigger problem. Not only are homes hard to find, but they’re getting more expensive to build (and to buy). Some inflation is expected, like when Grandpa reminds us that movies used to cost a nickel and iPhones were $499. But too much inflation causes the Federal Reserve to get involved – and the cure can be as painful as the illness.

As a strategy to help slow inflation, the Federal Reserve raised interest rates last month. This affects all types of borrowed money, including credit cards, consumer loans, and mortgages. That means the same $600,000 house – even if the price remains the same – will cost more to buy than it did the previous month. And what’s worse, the Federal Reserve is expected to keep raising rates throughout this year to fight inflation. Lawrence Yun, Chief Economist and Senior Vice President of Research at the National Association of Realtors, predicts 8-10 rate hikes this year, according to a recent “Forbes” article.

Unless you’re a cash buyer, you can expect to feel financial pain when buying a home this year. The chart to the right is a side-by-side comparison of how higher interest rates impact your mortgage payment. Note: If you already have a fixed rate mortgage, your payments won’t change. Changes in rates only affect new loans as well as mortgages with adjustable rates.
The good news is that eventually these rate hikes will help slow down home price appreciation. The bad news is that it won’t happen today. And until it does, Phoenix homes will be increasingly more expensive to buy and finance.

Shelley Sakala is a local realtor and owner of The Sakala Group Real Estate. Learn more at