Chicago's North Shore - North and Northwest Suburbs Real Estate Archive


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3 Reasons Why You Shouldn’t Worry About Rising Mortgage Interest Rates

by Allyson Hoffman

The signs of a rebounding housing market are all around. Pending home sales are up, new home construction is increasing, and the inventory of homes for sale is going down. That’s great news for home sellers who want to move.

Buyers, however, are concerned because mortgage interest rates have risen in the past few months. This has some people wondering about investing in a home right now. Should you worry about rising rates? No, you shouldn’t. Here are three reasons why rising mortgage interest rates are actually a good sign for buyers right now.

1. Interest rates are rising because the economy is stronger. A growing economy means more consumer confidence and more spending.  It also means that interest rates rise from the rock bottom levels we’ve seen for the past few years. Keep in mind that rising rates also mean higher prices, which will help protect your real estate investment.

2. Mortgage interest rates are still low compared to historical averages. Rates may be higher than they were a month ago, but look back a few years. When you compare mortgage interest rates to what they were just five years ago, you’ll see they are a bargain now. Combine relatively low interest rates with reduced prices, and buying a home now is still a good deal.

3. More buyers qualify for loans now, in spite of higher interest rates. Lenders have been tight with mortgages in the past few years, because of the risk of declining home values. However, home prices are now going up. Banks again perceive mortgages as less of a risk, and are slightly easing lending restrictions. That means even with higher rates, more buyers are able to get loans.

Lastly, there’s no way to tell for sure what mortgage interest rates will do in the future. Analysts agree, however, that it’s unlikely that interest rates will rise quickly enough to price the average consumer out of a home purchase any time soon. Most respected predictions suggest that rising rates will settle at or slightly above6.5%.  So if you are looking to buy, experts say that the combination of still low interest rates and low prices means that now is a good time to invest in a home.

When the time is right for you, please contact me and let’s discuss your real estate needs.  Now is a great to buy and sell.  There is no better investment than in real estate.

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
[email protected]

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.

Don’t Believe Everything You Read

by Allyson Hoffman
Many headlines in the media right now are proclaiming the total collapse of the housing market. What makes it seem very believable is the headlines are based on two reports from the National Association of Realtors (NAR): the Existing Home Sales Report and the Pending Home Sales Report. However, all is not what it seems.
Both reports look at two different sets of data:
  • A year-over-year comparison of transactions (Y-O-Y)
  • A month-over-month comparison of transactions (M-O-M)

The negative headlines you have been reading are based on the Y-O-Y statistics. They are horrific. There is a logical explanation for this however. Last year, at this time, we were headed toward the expiration of the Homebuyer Tax Credit, one of the greatest buyer tax incentives in American history. There were people rushing to get their home into contract and/or to a closing. This dragged demand forward. People who would have normally closed later in the year moved their closing up in order to take advantage of the tax credit. Comparing sales in the first four months of this year to the same time last year wouldn’t be comparing similar situations. That wouldn’t make sense.

A better way to judge the market at this time is to compare month-over-month sales. Here is a graph showing the increase in pending sales over the last twelve months.

As we can see, sales dropped dramatically after the expiration of the tax credit in April 2010. Then sales began to slowly rebuild and are now increasing nicely.

Bottom Line

The market is gaining momentum not losing ground. Headlines sell papers. Actually knowing what is truly happening in the real estate market is what’s important.

Article from KCM Blog




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1245 Waukegan Road
Glenview IL 60025
Fax: 847-400-0881

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[email protected]

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