Rising mortgage interest rates
Recently 30-year fixed mortgage interest rates hit 5 percent. This rate is up almost 1 percentage point in the last couple of months. But N.C. State University economist Mike Walden doesn’t think this rate hike signals an end to low-cost financing of homes.
“We always have to put these numbers in perspective. Mortgage interest rates are still lower today than they were a year ago. And in fact, if you compare them to the beginning of the recession, they are still a full percentage point lower than in 2007. And when they were much, much lower — about three months ago, when the mortgage rate (the 30-year fixed rate was down around 4 percent; it is now closer to 5 percent) — many said that was abnormally low three or four months ago, and the 5 percent right now is much more normal.
“So I would argue simply based on those comparisons that mortgage interest rates and what you have to pay to buy a house with credit is still a very, very good deal. And if anything, I think, as we look down the road two, three, four years if the economy continues to improve and, in fact, if economic growth accelerates, we could very well see even higher mortgage interest rates.
“So right now, even though those rates have gone up, they still may be a very good deal.”Category: Economic Perspective