Our motto since retirement is we do our transactions in cash or with debit card which we will pay off the balance at the end of each month. In other words, if it’s beyond our affordability, we don’t purchase.
Today’s prime rate as published by Bank of America is 8.25%. For borrowers accustomed to paying low rates of 3.5 to 5.5 %, this is a sharp jump. For first time homebuyers making the down payment is becoming more challenging.
So here is an old story we heard as retold by Jeff.
About twenty years ago, there was a couple who had pitched tents side by side at the Ala Moana Beach Park. The couple used the public showers every morning, got dressed in business attire, and walked to a bus stop. Curious, a passerby approached the couple and asked them where they go every day. They revealed that they are both attorney's and decided to live in a tent until they could save enough money for a down payment on a house.
With prime interest rates so high, it is quite possible that people will need to resort to such extreme measures once again.
Aloha -- Cathi