It’s no secret that mortgage rates have been going up. And the projections are that they will continue to rise throughout 2017. This is not in question. It has happened and will continue to happen. But how will these rising rates impact the housing market?
The experts are saying that every time there are rate increases, home prices also have nominal increases. It is expected to continue, as there is a big demand and supply gap at the present time. This is what happens when rates increased in 1984, 1994, 2000 and 2013.
The housing market should be capable of weathering the storm of gradually rising rates due to a tightening labor market, rising wages, and high levels of consumer confidence.
A small increase in mortgage rates shouldn’t have a large effect on home purchases. Buyers may need to slightly adjust their housing budget, and possibly spend a bit less, but it probably won’t make much impact on qualifying for a mortgage in most cases.
For rising rates to have a significant impact, the rates would have to be significantly higher than the planned raises. House buying power still remains historically strong.
The consensus of opinion is that even with interest rates rising slightly, due to a lack of supply and demand, prices will increase moderately. It is projected that there will be a home price inflation of 4.8% in 2017, and 4.1% in 2018.