Rising Interest Rates Are No Cause for Panic

Rising Interest Rates Are No Cause for Panic

Posted by Brian Burke on Friday, June 28th, 2013 at 12:38pm.

Recent studies have indicated a steady increase in mortgage interest rates, and these reports have given rise to some arguments about whether or not this trend will be harmful to the housing market on the whole. While home mortgage rates are going up, this does not spell disaster for potential homebuyers. In fact, some would argue it is quite this opposite, since the increase suggests a return to a more stable and profitable market.

A Summary of the Concerns

With the economy”and particularly the real estate sector”still in a delicate state after the subprime mortgage crisis of 2008, it is no wonder that people are expressing concerns about the recent increases in home mortgage rates. Real estate moguls looking to sell property as well as individuals and families looking to buy have cited apprehensions about the potential effects of these changing interest rates on the economy. Many sellers are afraid that these increases will scare away potential buyers, thus forcing the real estate market back into its previous slump, and buyers worry they™ll be getting a bad deal.

Benefits for the Market

Interest rates have indeed increased to almost 4% in recent months, a significant spike when compared to the stable low rates we™ve seen over the past couple of years. While some might see this increase as cause for concern, it actually demonstrates a sustainable confidence and increasing consumer investment in the housing market overall. Moreover, although mortgage interest rates are on the rise, overall home mortgage rates are still at an all time low.  Thus, those considering the purchase of a home can rest assured that it is still considered a œbuyer™s market.

It™s All About the Consumer

The generally positive attitude of potential homebuyers is main reason that real estate professionals are relatively unconcerned about the effects of these rate increases. In other words, though some have expressed trepidations about buying in light of the interest rate increase, the majority of consumers remain confident that the housing market and the American economy are, in fact, still on the upswing. So long as this is the case, most individuals will still follow through on sales, thus helping to steadily increase the demand for real estate.

Looking Ahead

Many analysts predict that interest rates will continue to rise in upcoming months, perhaps increasing to 5% before the year is out. While this might not be the best news for those looking to save some money on their home mortgage, it is still good news for the country at large. Many financial and real estate professionals have also emphasized the fact that even at 5%, the interest rates will be nowhere near where they were at their peak”which was close to 20% about 25 years ago.

The take-home message is that now is still the time to buy; in fact, if you wait too much longer, prices may only continue to rise. It™s still possible to get one of the lowest mortgage rates of this century if you apply now, regardless of what kind of property you are purchasing. From the mid-size family home to the more palatial estate, the house of your dreams is still within your reach.

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Brian Burke | Broker | ePRO | Expert   | 303.955.4220 Office | 303.710.2609 Direct |  Brian@kennarealestate.com

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