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Old 11-17-2015, 06:34 AM
 
33 posts, read 29,048 times
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THE EXPERTS say that mortgage interest rates are going up in 2016 and 2017. While 30 year mortgages have stayed below 4% in 2015, they are expected to go up to 4.5% by the end of 2016 and up over 5% in 2017.

While these figures are still low by historical norms, every quarter percent increase in mortgage rates will make the home more expensive for the typical person who pays a monthly mortgage. And because mortgage providers want you to typically have under 40% of your gross income going towards housing costs, as mortgage rates go up the typical person can afford less and less house. (For example, if they could qualify for a $400K home at 3.79%, at 5%, they can only qualify for a $330K home, so the seller of the $400K home has fewer potential buyers at that price point. So he will have to lower the cost of his home to get a sale.) Falling home prices only help the buyers, not the seller or local government.

What impact do you think rising mortgage rates will have on home prices and sales?
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Old 11-17-2015, 06:46 AM
 
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It will cause a slow down/plateau in most markets that will last as long as it does.

So perhaps across the board there will be fewer bidding wars and properties will stay on the market a few weeks longer. Some markets however will still be going batsh%t crazy and some markets won't be able to be saved even with the help of a priest.

Once purchasing power goes down and the number of mortgage applications slows the banks will gently ease off some of their restrictions to keep things flowing. Realtors will argue with clients to lower prices and clients will argue with realtors that their exact house sold a year ago for 4% more and refuse to lower the price.

If nothing else is going on the media will get involved and start bleating about realestatemaggeddon...

What market are you looking at?
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Old 11-17-2015, 06:55 AM
 
Location: Lakewood Ranch, FL
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In my market, where cash sales are very common, it won't have much impact but, obviously, it will have some impact in every market. We've been hearing warnings of increasing rates for years but it hasn't happened yet so I don't see a big run up as being likely.
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Old 11-17-2015, 07:00 AM
 
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Quote:
Originally Posted by bbronston View Post
In my market, where cash sales are very common, it won't have much impact but, obviously, it will have some impact in every market. We've been hearing warnings of increasing rates for years but it hasn't happened yet so I don't see a big run up as being likely.
IF RATES INCREASE, even a quarter percent increase can have a huge impact on who is qualified to buy a house.
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Old 11-17-2015, 07:05 AM
 
Location: MID ATLANTIC
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There's pent up demand. What is holding back sales has nothing to do with rates, but everything with earnings. When we see incomes rise, we will see sales pick up - this includes those finally finding jobs in their field. And those rising incomes could be around the corner, as signs of inflation are becoming noticed (cost of food). We have a generation of debt-ridden students that do not have jobs that reflect their degrees. Rising rates (or fear of) typically spurs a rush on buying, which can be best described as barely noticeable. The only thing this latest rise in rates has done is motivate my refinances.
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Old 11-17-2015, 07:06 AM
 
Location: Lakewood Ranch, FL
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Quote:
Originally Posted by So Many Questions View Post
IF RATES INCREASE, even a quarter percent increase can have a huge impact on who is qualified to buy a house.
Maybe...but I think it is more likely to affect the amount of the loan rather than the qualification. We may be saying the same thing though.
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Old 11-17-2015, 07:22 AM
 
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The real estate lobby will push this as far as they can until it finally blows up. Then DC will have to hit the reset button and go back to the days when you have to pay capital gains on the sale of your primary residence, and banks will have to follow GAP accounting. These low rates hurt more than they help.
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Old 11-17-2015, 07:29 AM
 
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historically mortgages in the 6-7% range have provided the best appreciation in homes since it means the economy is humming and folks are working . it also adds a bit of urgency which is good . after all the logic becomes we better buy now before we can afford even less house .

rates rising means no more or less to the real estate market then rates at these levels mean housing should be booming .

there is much more in the equation then rates .
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Old 11-17-2015, 07:40 AM
 
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Quote:
Originally Posted by So Many Questions View Post
IF RATES INCREASE, even a quarter percent increase can have a huge impact on who is qualified to buy a house.
You are just trying to talk yourself into this...a few markets may be frothy but those are the ones with loads of cash offers...so no negative impact from raising rates.

Your not going to see a 25% crash.

What market are you looking at?
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Old 11-17-2015, 07:44 AM
 
3,788 posts, read 1,723,980 times
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Quote:
historically mortgages in the 6-7% range have provided the best appreciation in homes since it means the economy is humming and folks are working . it also adds a bit of urgency which is good . after all the logic becomes we better buy now before we can afford even less house .

rates rising means no more or less to the real estate market then rates at these levels mean housing should be booming.
Historically - interest rates are at a 5000 year low and total govt. debt including promised entitlements is north of 70 trillion dollars. We are in uncharted territory and the combination of rising rates, rising tax burdens (real estate and income) and currency wars means no one knows what the heck is going to happen. Just because homes are going up in dollar terms - doesn't mean they are going up in value.
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