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  • Writer's pictureMichael Belfor

Thoughts on Rising Rates

In the first week of March, Freddie Mac announced that their 30-year fixed mortgage rate was over 3% (3.02%) for the first time since last July. I know that this likely came as a shock to many and that news dominated real estate headlines.

Articles talked about the “negative impact” it may have on the housing market although it is truly relative to our economy and where we are as we progress in 2021.

In saying this, there are two main things to consider:

1. The bump-up in rate should not have surprised anyone. Many had already projected that rates would rise slightly as we proceeded through the year.

2. Freddie Mac’s comments about the rate increase were not alarming as they stated, “The rise in mortgage rates over the next couple of months is likely to be more muted in comparison to the last few weeks, and we expect a strong spring sales season.”

My thought is that a “muted” rise in rates will not sink the real estate market, and most experts agree that it will be “a strong spring sales season.” This is due to the demand for housing in our market place, with still a limited supply which would cause appreciation that the National Association of Realtors, among others seeing as roughly 6% nationwide. This is likely to be greater in some markets like ours.

What does this mean for you?

Obviously, any buyer would rather mortgage rates not rise at all, as any upward movement increases their monthly mortgage payment. However, let’s put a 3.02% rate into perspective. Here are the Freddie Mac annual mortgage rates for the last five years:

2016: 3.65%

2017: 3.99%

2018: 4.54%

2019: 3.94%

2020: 3.11%

Though 3.02% is not as great as the sub-3% rates we saw over the previous seven weeks, it’s still very close to the all-time low (2.66% in December 2020).

And, if we expand our look at mortgage rates to consider the last 50 years, we can see that today’s rate is truly outstanding. Here are the rates over the last five decades:

1970s: 8.86%

1980s: 12.7%

1990s: 8.12%

2000s: 6.29%

2010s: 4.09%

Being upset that you missed the “best mortgage rate ever” is understandable. However, don’t throw the baby out with the bathwater. Buying now still makes more sense than waiting, especially if rates continue to bump up this year.

It’s true that you may not get the same rate you would have five weeks ago. However, you will get a better rate than what was possible at almost any other point in history.

Let’s connect today so we can still unpack some of the benefits of this market!

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