Mortgage rates are still very low and incomes are rising.
As you’ve likely noticed, stock markets have been up to their highest levels ever and mortgage rates have been on the rise too since the election. If you’ve felt a little uneasy about what this change in market movement means for you if you are considering selling or buying in the near term, I’m here to demystify all the scary headlines.
Yes, rates have gone up over the past few weeks and many in the media and the housing industry have been in a tizzy over it. So, when I see people freaking out—whether it’s my kids or a business news anchor—I tend to take a look at the data, just as I did when I wrote about the supposed Atlanta Housing Bubble. Here are the facts surrounding this post-election rise in mortgage rates:
- Average rates have risen. For the most common 30-year fixed mortgage, the average rate has risen from 3.59 percent on November 7th—the day before the election—to 4.14 percent on November 28th. That’s a difference of .55 percent, or about $60 per month on a $247,000 home price with 20 percent down. Now, would it be nice to have that extra $60 a month? You bet, but I doubt it will stop most buyers from qualifying and buying a home.
- Look what else has been going up! Americans incomes have also been rising and as of October 31st, wages have risen about 1.7 percent since January 1, according to the Bureau of Economic Analysis, Personal Income and Outlays report. For the average American household that earns $72,641 per year—according to 2014 U.S. Census—that’s $1,235 annually, or $103 per month more in our pockets.
- Historically rates have been much higher. If you know me, you know I love charts, so just follow along for a minute. If we look over the past 45 years—chart below—our mortgage rates now are very low.
Even over the past 5 years—see chart below—rates are looking quite favorable.
So even though the headlines seem scary, take a minute and look at the facts and you’ll see things are not that bad. It’s also important to remember what a rising stock market signals. It can be a sign of increasing optimism about jobs, earnings, and the economy as a whole, which hopefully will result in a better housing market and more opportunities for more Americans. Time will tell, and of course rates can and will continue to change, without notice.
If you are considering buying or selling in the near future, please get in touch. I became a certified Pricing Strategy Advisor so I can help you get the best price whether you are selling or buying. Trust me, we can and will find you a great home that makes sense—or cents ;-)!