Rising rates have many of you concerned. There are probably a lot of you in the industry that have not had the opportunity to experience 30yr mortgage over 4%! That being said, I am going to give you a couple of factual data points to use to combat the fear of rising rates!
- Mortgage rates have risen 1% TEN TIMES in the past 43 years! Solid wage and job growth combined with strong consumer confidence have offset reduced demand for housing. (remember my two points I always make..what drives rates? a. inflation and b. the economy) In a weaker economic environment, rising rates would be disastrous to the housing market. We are far from that.
- Don’t fall into the trap of watching builder stocks fluctuate. They are the most susceptible to significant interest rate moves…both high and low.
- Average 30yr rates in September 2017 3.75-3.875%–currently 4.375-4.5%. On a $200k loan that is ONLY a $60 increase in p+i payments!
- Do you all remember July 2017 when we hit an all time low sub 3.5%! Rates spiked towards the end of the year to 4.25% and the housing market still had the best numbers since 2013!
Having said that, the stronger economic background will top rising rates and will not ruin the amazing housing run that we are on. Demand is there.