Is this interest rate trend the Hindenberg disaster in real estate?
I think not. And I think it unwise to push consumers to buy property just because rates may go up a little in the spring.
Interest rates at 5%+ do NOT signify the end of modern civilization as we know it.
Interest rates at 5%+ do NOT justify running out an making an impulse purchase of a home.
Interest rates at 5%+ do NOT solely make housing unaffordable and will not lead to market collapse.
A little reflection on history may be in order.
In 1984, we bought our first home. The Pennsylvanial Housing Finance Agency helped. We took out a mortgage at below market rates. We qualified because my income for the prior year was about $300 less than the income cap.
We bragged a little about that bargain rate mortgage.
It was 12.09% fixed rate for a 30 year loan. And it was a steal. Market rate would have put us at 13 3/4% to 14%.
We later refinanced to 10% and then to 9% before we sold the house. And lived in a home we loved for about 9 years.
A family member took an 18% ARM. Scary? Maybe not. He told me later that it was the most fortuitous financial decision he had aver made, as over the course of 6 or 7 years he watched that rate tumble.
Yes, if you are on a bubble, and a quarter percent rate increase will disqualify you from buying, any increase is dreadful, but maybe maxing out the finances to buy is being a little too aggressive. That is a personal decision, and one with long term implications.
Just don't find yourself saddled with a home you don't love, or in a location you don't like, because you made a buying decision motivated by interest rates rather than property features and price.
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