Mortgage Rates On FIRE

Dated: 02/22/2018

Views: 30

Mortgage Rates on FIRE! Home Prices Up in Smoke?


Mortgage Rates on FIRE! Home Prices Up in Smoke? | MyKCM

Mortgage interest rates have already risen by over a quarter of a percentage point in 2018. Many are projecting that rates could increase to 5% by the end of the year.

What impact will rising rates have on house values?

Many quickly jump to the conclusion that an increase in mortgage rates will have a detrimental impact on real estate prices as fewer buyers will be able to qualify for a loan. This seems logical; if there is less demand for housing then prices will drop.

However, in a good economy, rising mortgage rates increase demand as many prospective purchasers immediately jump off the fence to guarantee they get the lower rate.

Let’s look at home prices the last four times mortgage rates increased dramatically.

Mortgage Rates on FIRE! Home Prices Up in Smoke? | MyKCM

In each case, home prices APPRECIATED and did not depreciate. No one is projecting as dramatic an increase in rates as the examples above. Most are projecting an increase of approximately 1% by the end of the year.

The last time mortgage rates increased by 1% over a twelve-month period was January 2013 (3.41%) to January 2014 (4.43%). What happened to house prices during that span? They appreciated by 9.8%.

Just two weeks ago, Rick Palacios Jr., Director of Research at John Burns Real Estate Consulting explained:

“Mortgage rates have risen 1% or more ten times in the last 43 years, with little impact on home sales and prices when the economy was also strong…Historically, rising confidence, solid job growth, and higher wages have more than offset reduced demand for housing resulting from higher mortgage rates.”

Bottom Line

When mortgage rates increase, history has shown that prices appreciate (and do not depreciate) during that same time span.



The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

Latest Blog Posts

Home Buying

How to Buy a House If you want to know how to buy a house, you've come to the right place!When you start thinking about buying your first house, it’s easy to let your emotions run the

Read More

May 15 2018 51594 1

Inventory levels hovered at all-time lows in the first quarter of 2018, driving up home prices, according to the latest quarterly report from the National Association of Realtors.The median

Read More

How Much Did You Say They Are Asking

FORT WORTH HOME PRICESThe average home price continues to rise but beginning to level off. Up 15.3% in 2017 to just 6.9% in 2018 (still above the national average). If yo would like to know what

Read More

Why Home Prices Are Increasing

Why Home Prices Are Increasing There are many unsubstantiated theories as to why home values are continuing to increase. From those who are worried that lending standards are again becoming;

Read More