Interest Rates on the Rise

Interest rates are on the rise!  We are teetering on 4.97 - 5.08% depending on where you look and what type of lender you have found.  

Many wonder if this is a good thing or a bad thing?  I am thinking that it can go either way and depending on how you "analyze" any situation you can swing it to your point of view.

I like to look at both sides - so let's look at interest rates rising as a positive first.  

• Raising interest rates is said to ward off inflation - we are all a little worried about inflation when coming out of this recession (or trying to come out of this recession)

• Some are saying that this little bump in interest rates will actually push those people that are on the edge of the "to buy not to buy" plank into buying because they fear a huge increase in rates past 5%. Let's be honest here, even 6% is still a good interest rate compared to the history in the housing market.

This hope of those "jumpers" spurring the market, is still on the cross our fingers side, the reality is still that most people can't get a mortgage, they don't have a job, and people are still losing their homes everyday.

So, is this increase in interest rates still a positive thing? - Let's switch over to the negative.

• With a higher interest rate consumers will find it harder to manage that higher mortgage payment and will have to settle for a less expensive home. 

• Higher mortgage interest rates mean a downward pressure on home prices.  Well....our home prices are pretty low and pushing any lower is pretty daunting.

Positive, negative and everywhere in between let's stick to the present and what we know to be certain.

5% - still a low interest rate

People are still buying homes at this rate and are still losing their homes at this rate.
Lenders are strict and buyers are finding it difficult to even get a loan to take advantage of the low rate.

  

We are in a state of 2 steps forward 1 step back.  Eventually we will get somewhere but how long and how fast that will take is going to take is purely speculative.