With a slight increase in interest rates in recent weeks, a lot of would-be first time buyers are starting to voice more concern and even become more wary of buying their first home. Is it still a good idea? Is it financially smart with the recent increases? How much more will the loan cost, in the end, with a higher percentage? Would we be asking these same questions if we were looking at mortgage interest rates in the 1980’s (more on this a little later)?
It isn’t only buyers that are a little anxious over the higher rates either – home builders are feeling pressured too. Home orders have only increased 12% within the last two years; 12% less than projected. This means financial strain for those building new homes as well. Builders are going to have to teacher a little bit of a history lesson to peole interested in buying their first home if they want to increase their amount of home orders.
Although the concern amongst young homebuyers is more prominent than expected, people interested in buying a home and looking at mortgage rates need to realize that the interest rates today are comparatively low when looking at past interest rates. In the early 1980’s mortgage interest rates were at 20%! 5 cents to the dollar borrowing doesn’t seem nearly as expensive after looking back three decades.Buying a home is a big decision and, in general, a smart financial decision and invetment in your future (see my previous blog for more information). Don’t let interest rates be the only determining factor in getting into a new home.
For more information check out http://www.businessweek.com/articles/2013-07-26/can-home-builders-teach-mortgage-history-to-wary-millennials