condo financinghome property values December 18, 2015

Rising Interest Rates – No Need to Over React

The Federal Reserve raised interest rates by 0.25 percent this week, causing concern that increasing mortgage interest rates will follow, which could have a negative impact on the housing market. Its unlikely we'll see any significant increase in mortgage interest rates in the immediate future. Could they rise in the coming months, possibly, but not enough to create any cause for concern. The latest increase in interest rates will likely be felt first for revolving credit, (credit cards and home equity loans). For non-revolving loans, like mortgages, there should be little, if any, immediate impact. Any increase in mortgage interest rates makes buying a home more expensive, but its credit card debt, which may become more expensive, that could be of concern for buyers planning to purchase a home next year.

Here's a little perspective . . . many years ago I worked in the mortgage banking industry in Washington, DC. Mortgage interest rates were in the low teens and people still bought and sold homes. After that experience, any interest rate under 10% looks great to me! With current interest rates still so favorable, any slight increase isn't likely to have a negative impact on are home values.