What Happens When Interest Rates Rise?

Over 2013, we saw a jump in interest rates from about 3.5% to anywhere between 4.0%-4.5% for your typical 30 year, conventional loan. Most people expect a catastrophic bubble much like everyone experienced 5 years ago. In fact, in today’s market, with housing and income levels as they are, we would have to see upwards of 7% rates to make a U.S. median priced home unaffordable. We can, however, expect a drop in refinance originations (as to be expected with record low rates just months before). So even though interest rates are on the rise and it can be expected to reduce housing demand, rates would have to drastically increase before purchase demand would reduce substantially. There is no recent trend that hints towards decrease in market stability. In fact, a steady, gradual rise in rates is not only a sign of our overall economic situation improving, but that it will not derail the recovery.

 

For more information on current interest rates,  please contact us. We have a list of preferred lenders and individuals who can give you the most up to date interest rates and loan product availability.

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