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Market News and Trends

Interest Rates Rise


Well, here we go again ….

Mortgage interest rates (30-year fixed rate loans) have been very low for a very long time  — mostly 5% or below since early 2009, and mostly 4% or lower since late 2011.  There have rumors periodically during each of those years that rates were about to rise.  We’re hearing it again this week, and if you look at the most recent history, it certainly looks like the rate increases are really here:

Mortgage Interest 9-17 to 1-18

Yes, over the past four months, the average 30-year fixed rate mortgage has gone up to more than 4%!  But … let’s adjust the scale and add some historical perspective:

Mortgage Interest 1972 to 1-2018

For those of you who don’t remember, interest rates spiked to 18% in the early 1980s, and were consistently above 12% from late 1979 through late 1985 — about as long as we’ve had sub-4% rates in this decade.  The long-term average (1972 to Present) was 8.2%, about twice today’s rate.

I actually believe that this time we will see rates rise, but not by much and not overnight.  I last wrote about this subject almost a year ago (Interest rates going up?), and I included comparisons to other market interest rates and their relationships with mortgage rates.

That post also includes some insight into how higher mortgage rates affect prospective home buyers.  If you’re planning a home purchase over the next couple of years, you should be aware that interest rates do impact your buying power.

So … mortgage rates going up?  I think so this year.  In a recent presentation, Dr. Jim Gaines, Chief Economist at the Texas A&M Real Estate Center, suggested the increase might be in the 0.5% (1/2 of 1%) range by year-end.  I’m going to trust Dr. Gaines’ crystal ball on this.

About Bill Morris, Realtor

Many years of business experience (high tech, client service, business organization and start-up, including 18 years in real estate) tell me that service is the key to success and I look forward to serving you. I represent both buyers and sellers throughout the Austin metropolitan area, which means first-hand market knowledge is brought to bear on serving your needs. Learn more about my background and experience, my commitment to my clients, my profession, and to the real estate industry at CentralTexasHomeSearch.com.

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  1. Pingback: Re-Post: Interest Rates | Bill Morris on Austin Real Estate - October 5, 2018

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