Thursday, March 22, 2018 / by Carl Gentile
Rising Mortgage Rates DO NOT Lead to Falling Home Prices
![]() Rising Mortgage Rates DO NOT Lead to Falling Home PricesRecently, Freddie Mac published an Insight Report titled Nowhere to go but up? How increasing mortgage rates could affect housing. The report focused on the impact the projected rise in mortgage rates might have on the housing market this year. Many believe that an increase in mortgage rates will cause a slowdown in purchases which would, in turn, lead to a fall in house values. Ultimately, however, prices are determined by supply and demand and while rising mortgage rates may slow demand, they also affect supply. From the report:
The Freddie Mac report, in acknowledging this situation, concluded that prices are not adversely impacted by higher mortgage rates. They explained:
They went on to reveal that the Freddie Mac National House Price Index is…
The following graph, based on data from the report, reveals what happened to home prices the last six times mortgage rates rose by at least 1%. Bottom LineWhether you are a move-up buyer or first-time buyer, waiting to purchase your next home based on the belief that prices will fall because of rising mortgage rates makes no sense. |