The Fall (and Rise) of Mortgage Interest Rates

The Fall (and Rise) of Mortgage Interest Rates

It’s no secret the home buying public has enjoyed some historically low rates over these last few years. To the consumer, these have almost become the new standard as they have been low for so long. But we can never forget that real estate is a market; and therefore subject to myriad influences.

In the case of interest rates, the Fed’s end of year announcement that they would be pulling back some of the stimulus package that has helped keep rates where they currently sit is a certain catalyst for change. A mortgage rate buzz kill if you will…

The guys at Keeping Current Matters (KCM) have been talking about this event for some time. They recently quoted Doug Duncan, chief economist for Fannie Mae, who announced this summer:

“I don’t think the Fed ultimately would be troubled with a 6.5% mortgage rate.”

So we’ve had an artificial suppression of interest rates that will soon have nowhere to go but up once the Fed officially curtails their purchase of mortgage backed securities.

At the end of the day, is this a cause for panic? No. Is this a time to assess home buying goals in relation to escalating interest rates and what that means for home values? That’s a big yes. 

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