Interest Rates Remain a Gift – History Vs. Hysteria; Look at the History, Please
Borrowers, Realtors, investors and the markets as a whole all seem to be in a panic over rising interest rates.
The only people who should be worried, however, are “refi-ologists” (businesses and companies who focus only on refinancing).
For starters, higher rates can be a good thing for several reasons, as I discussed in this previous blog: Why Higher Interest Rates Are Good.
ANY RATE UNDER 6% IS A GIFT FROM A HISTORICAL PERSPECTIVE
More importantly, as we repeat often, any rate under 6% is a pure gift when you look at rates from a historical perspective.
HISTORICAL RATE TABLE
This table from Freddie Mac shows average interest rates over the last thirty years.
A few choice selections are set out below. Not only are rates extremely low now, but loans are much, much cheaper as well.
| DATE | RATE | COST |
|---|---|---|
| March of 2017 | 4.2% | 0.5 Points |
| April of 2014 | 4.34% | 0.6 Points |
| 2008 (entire year) | 6.03% | 0.6 Points |
| 2000 | 8.05% | 1.0 Point |
| 1995 | 7.93% | 1.8 Points |
| 1990 | 10.13% | 2.1 Points |
| 1985 | 12.43% | 2.5 Points |
CONCLUSION: The ability to lock in a historically low rate (anything under 6%) is another huge benefit from buying now.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167
