With the rise over the past few months in home loan interest rates, many are worried that the rise in interest rates will actually serve to stop the recent rebound in the housing market. With home values having rebounded in the past year and interest rates of all-time lows, it is certainly more expensive to purchase a home this year, as opposed to last.
However, interest rates are still at a very low level historically and if we look back over the past 30 years, at the last few times that we saw a sudden move up in interest rates, we actually saw an in interest rates, as illustrated by the graphic above, we actually saw rising home values as well.
The reason that is, is because interest rates don’t tell the whole story when it comes to home values going up. Home values go up, because buyers are confident in the housing market, because they are confident in the economy and because often times the overall value of purchasing outweighs renting.
For these reasons, even though we have and will probably see rising interest rates, the housing market will not be driven by interest rates, it will be driven by our overall economy. Let’s hope that remains on track and recovering and so will housing.
As always, it is best to speak to a licensed mortgage lender to specifically answer mortgage questions tailored to your specific situation and to fully pre-qualify for a home purchase if you are looking to purchase a new home.
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