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Interest Rates Remain a Gift – History Vs. Hysteria; Look at the History, Please

PANIC OVER RISING RATES

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.

 

DATERATECOST
March of 20174.2%0.5 Points
April of 20144.34%0.6 Points
2008 (entire year)6.03%0.6 Points
20008.05%1.0 Point
19957.93%1.8 Points
199010.13%2.1 Points
198512.43%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 at (925) 855-4491
Real Estate Broker, CA Bureau of Real Estate, BRE# 01524255, NMLS# 335646