The increase in mortgage rates has been just a sign of the economy getting healthy. Mortgages as we know them have only really been around for about 60 years. Yes they existed before but not in the way we understand and use them today. So they are a relatively new financial animal.
So you have to look at the cycles since WWII to get a real feel for the market and interest rates. As interest rates rise, housing prices stabilize and then begin to fall. This is so people can afford the payments. As interest rates fall housing prices rise because more people can afford the payments.
The economy works best when interest rates for home mortgages are stable between 7 and 11 percent. People can afford the payments and house prices are not skyrocketing.
The great problem is that extremely low rates that we have seen over the last 5 years have driven housing prices very high. Now we are seeing a slight correction as rates went up. The consumer market has a very short memory. They see low interest rates and think they should always be there. When rates go up and they see great real estate bargains they think the bargains should always be there.
But all things move in a cycle. It is up to us as real estate and mortgage professionals to see the cycles and help people get into the best deals for the cycle we are currently experiencing.
From my own past my first home was bought no money down VA just outside of Washington DC. The interest rate was 15% and we thought we got a bargain and our families thought we were being ripped off. 3 years later we sold this condo for a 60,000 Dollar profit. Of course at the same time our savings were earning 21% in a money market fund.
I believe we are on the verge of another great run. Depending on your area you will begin to see homes move. You just have to use the tools that are available to help your clients achieve their real estate goals.
Snapper
http://www.mortgage-refi-guide.com
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