Dramatic Mortgage Rate Increases From the Past
Dramatic Mortgage Rate Increases In The Past
This chart shows over the last 30 years the four times that interest rates have dramatically spiked. May 1983, March 1987, October 1993 and April 1999.
They spiked more than 1% over that period of time.If you look at the bottom you will see the what happened to housing prices during the spike.
Housing prices actually went up when the rates spiked so much.
Now I keep hearing that if interest rates keep going up than prices are surely going to go down.
Not necessarily, as we can see the last four times this happened prices went up. I’m not saying that this is going to take place for sure, because it’s not just interest rates that determine price, It’s the amount of supply, the inventory, it’s where the economy is, it’s where unemployment is and in each one of those time periods, the fundamentals were different.
What can be noted is that there’s no guarantee that because interest rates are spiking up that prices are going to spike downward. There’s no historical evidence that can prove that, but people are talking like there is.
You will want to keep this chart so if a buyer says to you, “Well with interest rates going up, I think prices are going to come down. I’m going to wait.” Well, wait for what?
If a seller says, “Well I was thinking about moving up, but with interest rates spiking up, I think the price of the house I’m going to buy is going to tumble. My house is going to get affected too, but since that house is a lot more money, I’m going to actually save some money waiting for both prices to tumble.”
Now is the time, don’t gamble when it comes to rate. As we know the house usually wins.
Sean Young
www.mylendersean.com
