Think way back to October 2, 2016. On that date, the average overnight rate on the same 30 year mortgage sat at an all time low of 3.35%. Today’s cost of borrowing money has jumped almost 25% from that number. If you don’t think interest rates have an impact on home prices you are wrong. Especially when they start moving higher at accelerated paces.
Sure, that all time record low was 70 weeks ago, but you have to go back further, much further, to find a date when interest rates were higher. You have to go all the way back, 132 weeks to July 26, 2015, to find a date when the costs of borrowing money were higher. That’s a record home buyers wish we didn’t break.
Last year we sat and watched the Fed raise rates three times and the mortgage markets paid no attention. Mortgage rates actually declined. But in 2018 we are seeing movement that we have not seen in a long, long time. Compounding the recent increases is the fact many experts feel the Fed will be forced to raise rates faster than expected to deal with an accelerating economy.
Higher interest rates will impact many things. Home sales, home prices and don’t forget the stock market. After historic rises in the Dow Industrials, many will start looking for better future returns outside of the equity markets.
As we keep telling everyone doing real estate in any way you deserve to be fully informed and that means working with a broker who will educate you. If you want to be sold, there are thousands of other Realtors out there, but if you seek education it’s super easy to contact the Paradise Sharks team at firstname.lastname@example.org or 561.308.0175.