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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

More than thirty years of business experience (high tech, client service, business organization and start-up, including many 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: -- Seller Representation is a comprehensive process that begins with thorough market analysis and consultation, continues with properly staging the home to achieve the highest price possible in a reasonable time on market, a complete program of marketing and promotion, ongoing updates and communication, closing coordination, and follow-up throughout (and after) the sale. -- Buyer Representation is also full service: shopping, previewing, price and market consultation, contracting, negotiating, coordination of inspections, appraisals, repairs, and closing details, and follow-up beyond the closing of your purchase to ensure your lasting satisfaction. Because the real estate industry is becoming more sophisticated and challenging every day, you need a professional that understands the industry and is positioned to stay ahead of the game. I go the extra mile to help you achieve your goals. That's why I constantly research the market and property values so your home is priced effectively from day one. I also make sure the public knows your home is for sale by using innovative advertising and marketing techniques to attract potential buyers.


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