Putting the recent mortgage rate increase into perspective

One week the headlines are shouting  that the recent recovery in home prices is creating the possibility of a new bubble; the next that the spike in mortgage rates is going to kill the recovery in prices and sales.

So perhaps a little perspective is called for.

If you first thought of buying a house when the 30 year rate was 3.5% and you find it is now 4.5% then that is a sharp jump. But many of us have owned houses for much longer. This chart, from Freddie Mac, confirms that mortgage rates are still at historically low levels. What you will note is that mortgage rates were much higher when home prices wee soaring. Mortgage rates are but one factor in the home buying decision.

Source: Freddie Mac; Oliver Reports

Source: Freddie Mac; Oliver Reports

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