National News: Will A 5% Interest Rate Have A Big Impact On Home Sales?

Here's a quick perspective on the interest rate rising to 5% in the next year or so. It sounds like we shouldn't be too alarmed........

If the 30-year fixed-rate mortgage rose to 5 percent, the impact would be a slight decline based on First American’s Potential Home Sales model.

Why?

• Rising rates indicate a positive economic condition which in turn will cause household income to rise. This will help offset the increase in borrowing costs from higher rates, according to Mark Fleming, First American’s chief economist.

• Adjustable Rate Mortgage could be an option to offset the higher mortgage rate too.

Fleming writes. “The likely rise in mortgage rates is not the worry for first-time home buyers, but whether they can find something to buy in today’s supply-constrained market.”

Source: Source: “What’s the Outlook for Housing Market Potential Amid Rising Mortgage Rates?” First American Economic Center Blog (June 18, 2018)

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