Mortgage rate over reaction

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Mortgage rates in2005

The Federal reserve raised the benchmark interest rate by .25% yesterday. That doesn’t translate into a .25% increase in mortgage interest rates but even if it did the new rates would only add a small amount to monthly house payments on new mortgages.

Mortgages rates will rise but I think the real estate industry is over reacting. In 2005 rates were more than 2% higher than they are today. More homes were sold that year than will be sold in 2015. Average home prices were higher in 2005 than they are now too. Rents however are higher in 2015 than they were in 2005.

No the sky isn’t falling. It is even possible that the housing market and the economy is recovering from the great recession. There have been times in recent history where both home prices and interest rates were higher than they are today and people bought and sold houses.

The stock market responded positively to the rate increase as did world markets.

I think the way the rules and regulations for borrowing money have tightened up is far more of a threat to first time home buyers.

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