Mortgage Rates Are Going Up And Why Home Buyers Should Not Worry

Dated: 12/01/2016

Views: 140

So Lending rates are on the rise, up nearly half a point since last week.  But should this be looked at as such a bad thing?  Rates have been at an all time low and cannot be expected to stay there if we are wanting to stimulate any kind of economic growth.   With that increase will come some inflation but combined will stimulate more jobs, higher paying wages.   Mortgage rates go up, making affordability go down, but to put in into perspective it's still at an very high level, being better than it has been in the past two decades.  MBA chief economist Mike Frantantoni stated that new mortgage purchases should increase approximately 10% in 2017 due to the strengthening of our economy, employment rate and housing demand.   The Home building industry is doing very well and as long as our housing market continues to do well supplying the job market, we will continue to see a drop in the unemployment rate.  The roughly 5% increase in rentals are likely to encourage millennials to get off the fence and purchase a home now rather than rent for another few years.

Economically, the last few years have been moderate in growth while the rates have been at record lows. Shouldn't we have seen a strong surge in economic growth with the rates where they've been?  Unfortunately that's not how it works as stated above.  Our current government policies have kept a choke hold on growth, and to see a slight increase in mortgage rates will actually be better for the economy in the long run. 

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