In and of itself, a 3/4 point home mortgage rate rise is not a catastrophe. From 3.5% to the low 4's will not drive buyers from the market when inventory has already been slim. Now make that home mortgage rate 5.5% as some day it will be and you will see a slowdown. Consider this: when millions of mortgage holders have home mortgages in the 3.5% range, how many do you think will move if rates become 5.5% or higher? Not many. To me that means that some day down the not too distant road we'll see demand shrink and values ease back. It won't be forever but it will come given the amount of time we've seen interest rates so low. A lot of people don't think the Fed will stop buying down home mortgage rates because cheap money really is the key factor in driving any economic recovery right now. Others are taking Bernake's comments to heart.
What's it mean for homeowners? Buy the smartest you can....buy for the long term.....buy for quality of life. Forget about the rest of it. This is about your family's shelter.....your overall quality of life.....your legacy at this moment in time. These decisions don't need to be taken lightly but at the same time there are no crystal balls. Don't drive yourself crazy analyzing as a buyer or seller. Just get the closing table aggressively and know for this moment you've done the best you can.
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