This week our listings saw an average of 1.1 showings each. It has been a slow week but that can be expected considering the Fourth of July weekend which kicks off tomorrow. Next week should pick up as vacationers return to the daily grind.
There’s been a lot of talk lately about the rise of mortgage interest rates. There is no doubt that they have increased over the past few months and could continue to do so. Rising rates should most definitely be a concern to anyone considering a purchase in the next few years.
Historically over the past 9 years, rates have fluctuated within a range of 4.81% as a low to 8.52% as a high for the Freddie Mac 30 Year Fixed. The high point was back in May of 2000 and the low was just three months ago in April 2009. Currently, Freddie Mac shows that the average rate in June was 5.42%. The current rate is the highest its been in all of 2009, but compare that rate to the past nine years.
The Freddie Mac rate fell below the current 5.42% only twice in the past nine years and did not hold that level: December 2008 saw 5.29%, March 2004 saw 5.45%. Every other month back to January 2000 saw interest rates higher than we have today.
Rates are an absolutely critical factor in a recovering real estate market. That they are so low today is somewhat obvious since our economy is in the worst shape the past nine years have seen. But when you stand back and look from 50,000 feet, there have been few opportunities to lock at such a low number.
Rates are very low right now, but they are clearly on the rise. A 1% rise in interest rates for every $100,000 means an increase in monthly payment of about $85. If they rise too quickly, a great deal could quickly become marginal. The market is ripe and rates are great. I’ve said it before and I’ll say it again this week. Its a great time to buy!