Earlier this year we discussed the importance of mortgage interest rates and their effect on purchasing power. With interest rates increasing for the last month, let's look at how the increase has affected homebuyer purchasing power. Suppose that you are in the market for a new home and your finance company advises you that you prequalify for a loan with a monthly payment of $575.00 for principal and interest. Had you talked with the mortgage company in early April of this year you might have gotten a fixed rate, 30 year mortgage, at 3.937% APR. Based upon your monthly payment amount you would be looking for a house priced at about $121,360.00. If however, you are shopping this week for a house, assuming the same montly payment amount of $575.00, your 30 year, fixed interest loan will more likely be at a rate of 4.941% APR. Based upon this figure, you can onlly purchase a house priced at $107,835. Loss of purchasing power? = $13,525.00 or 11% Watch those interest rates, they certainly effect your homebuying power.