Even with Mortgage Rates Rising, No Need to Panic


Filed under: Market Comentary


buying a homeFederal Reserve Chairman Ben Bernanke made comments this past week in which he hinted that the Fed may begin backing off its monthly, multibillion-dollar bond buying measure. And, according to a recent article by Casey Bond, this has a plethora of potential homebuyers panicking because they believe that it may be too late to buy a home with great rates.

Reuters has reported that loan requests for home purchases fell 3%, and the number of refinancing applications dropped by 3.4%, according to Mortgage Bankers Association’s seasonally-adjusted index.

And, even though mortgage rates have been historically low for quite a while, we all knew that the day would inevitably come when the rates would have to rise–well, that day is here, and many consumers are now realizing that they weren’t ready for it yet.

Bond adds that if this is you, stop freaking out! She says the truth is rising mortgage rates are no big deal, and that home financing is still “incredibly” affordable at today’s mortgage rates.

David Howell, executive vice president and CIO at McEnearney Associates, Inc. explains that even though rates have finally bottomed out, interest rates are still extremely low. He adds that when his business opened in 1980, mortgage rates averaged 12.71%, and even climbed much higher than that.

Howell said, “But people still bought homes, and believe it or not, home prices actually rose slightly during that period of time.”

Bond mentions that homebuyers often become “sucked into the short-term data” when you are seriously considering making the biggest purchase of your life. She suggests that you should put mortgage rates into perspective, and then it will definitely become clear that home financing is still “ridiculously” inexpensive.

It is important to realize that if you are serious about purchasing a home, it really doesn’t make a lot of sense to wait. As Bond says, if you are in this situation, you should “pull the trigger” and buy.

Just remember that previous generations of homebuyers financed their property at double-digit rates, and the majority of them did well.

Finally, according to Bond, as long as you are realistic about your ability to buy and what you can definitely afford, these current rising mortgage rates should have little impact on your decision to go through with a purchase.

If you have questions about whether now is the time for you to buy, please contact me and I will discuss in detail all of the information you need to know.

 


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