For years now, interest rates have remained at historic lows.
This last recession was not caused by inflation, but rather, by a national policy to increase homeownership, coupled with disenchantment in the equity markets. Lower interest rates did not cure the recession, but helped fuel the readjustment in lending, values and national housing policies.
But as the market recovers, where do we go from here? The inflation drums are beginning to rumble. Little by little, long-term interest rates are certain to rise.
While I don’t expect to see us returning to the double-digit inflation rates of the past, I would not be surprised to see rates eventually rise as much as 2 points, as they have done historically after they bottom out.
But actions speak louder than words. The Feds have not indicated that they will raise rates anytime soon; but they are rising as we speak. The latest average on the 30-year fixed rate was 3.63 – the highest it has been since August 23, 2012, according to Freddie Mac.
Upward momentum may actually incite even more demand in our markets where there is a historically low inventory of property available. Rates will begin to move; that much is certain.
So if your credit is good and you’re ready to move up, downsize or purchase a second home, it’s time for you to get moving now!