The Real Impact of Increasing Mortgage Interest Rates on Home Prices

Economists have been stressing the rise of mortgage interest rates, especially in the face of the Fed tapering the stimulus package.  According to the KCM blog, however, housing prices may not be affected as extremely as originally projected

History has shown that increasing mortgage interest rates have not necessarily affected home values negatively in the past.  Four times over the past 30 years have yielded a dramatic increase in housing prices.  Here is the data we have, provided by KCM blog:

So, what does this mean for prospective homebuyers?

A rise in housing prices alongside a rise in mortgage interest rates may not necessarily be something to expect for certain.  However, buying sooner rather than later is still highly advisable, as affordability becomes farther out reach for most homebuyers while mortgage interest rates increase.

Beginning your home search?  Unsure what the market conditions mean for your process?  Send me an email or give me a call and I will be happy to discuss.