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INCREASED INTEREST RATES DOES NOT MEAN, LESS HOMES SOLD

By
Mortgage and Lending with Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 NMLS # 6869

“Increased Interest Rates DOES NOT Mean, Less Homes Sold”

 

The article below makes the assumption that house salesSimple supply and demand equation will collapse. The truth is, that will not change demand, nor will it change future increase in home values. More and more people are coming into the home buying market, as demand gets stronger, rates will move upwards, but even if they went up 1-2% over the next couple of years, it will not slow down the pent up demand. The pent up home-buying demand, means values will start moving up as well. You can take my comments to the bank or should I say to your mortgage broker.  

 

Higher Mortgage Rates Unlikely to Drown Housing: Group

By: Ryan Schuette

The potential for a lift in mortgage rates is unlikely to spell trouble for the housing recovery, according to a recent report.

 

www.themreport.com

Paul Diggle, a property economist with Capital Economics, said in a note Monday that still-low home prices will help cushion the blow from interest rates.

He said that the consultancy doubts that “higher mortgage rates will derail a housing recovery” that continues to benefit from higher home sales.

Mortgage rates continue to linger near record lows, with 30-year and 15-year fixed-rate mortgages hovering at or below 4 percent for the past several weeks.

Waning confidence in Europe’s ability to halt the debt crisis in Greece drives investors to U.S. Treasury debt, widening yields and allowing mortgage rates to remain at historic lows.

The economist cited a National Association of Realtors forecast that said 30-year rates could rise above 5 percent.

He also said that low home prices would help ensure that household income is able to absorb a lift in interest mortgage payments and monthly principal.

“That would leave the monthly burden of servicing a mortgage at less than half of what it was six years ago,” he said. “Overall, the housing market recovery that appears to be underway is probably strong enough to withstand a moderate rise in mortgage rates.

“Either way, mortgage affordability will still remain very favourable [sic],” Diggle wrote.

 image 1: renjith krishnan/freedigitalphotos.net

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Joe Petrowsky, NMLS #6869

Right Trac Financial Group, Inc. NMLS #2709

110 Main St.

Manchester, Ct. 06042

Office: 860 647-7701 x116

Fax: 860 647-8940

Cell: 860 836-9294

Email: joe@righttracfg.com

www.righttracfg.com

www.joepetrowsky.com

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Joe Petrowsky does not guarantee nor is in any way responsible for the accuracy of the information provided herein, and provides said information without warranties of any kind, either expressed or implied.

Equal Housing Statement: We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. We encourage and support an affirmative advertising and marketing program in which there are no barriers to obtaining housing becuase of race, color, religion, sex, handicap, familial status, or national origin.

Comments (3)

Doug Dawes
Keller Williams Evolution - 447 Boston Street, Suite #5, Topsfield, MA - Topsfield, MA
Your Personal Realtor®

When we bought our house we paid 13% interest. The rates were even higher than that at one point and people still bought. It will be interesting to see if the banks will loosen their grip a bit. Even if the rates go to 6% it's still cheap. That being said I expect to see much higher rates given the monetary policy of the U.S.

Mar 21, 2012 10:52 PM
Edward Gilmartin
CRE - Boston, MA

We need a strong economy to keep housing strong. Well paying jobs are key too. Low rates are not doing unemployed workers much good. Historically housing values have risen even in times of high mortgage interest rates. What will make housing less affordable could be the financial conditon of many municipalities...look for big jumps in property taxes in the future.

Mar 21, 2012 11:00 PM
Tracy Oliva
West USA Realty - Arizona - Fountain Hills, AZ
The Oliva Team Arizona Agents

Joe this is a good read,keep up the good work and keep them coming,Also good luck in 2012.  E

Mar 21, 2012 11:02 PM