House Interest Rates Rising!
phobicsquirrel
Posts: 7,347 ✭✭✭
http://www.usatoday.com/story/money/2013/06/27/mortgage-rates-6-27/2463333/
Almost 4.5 percent now. I really don't see why they are raising this so high and so fast. I love how these articles always say how low it is, even now. But what they don't say is how much home prices have jumped. In Oregon most homes go for 200,000 and up and that isn't even for a medium sized house. Sure there are always sellers who are trying to unload or a bank property. Also property taxes are way too much here as well. It never ends.
Almost 4.5 percent now. I really don't see why they are raising this so high and so fast. I love how these articles always say how low it is, even now. But what they don't say is how much home prices have jumped. In Oregon most homes go for 200,000 and up and that isn't even for a medium sized house. Sure there are always sellers who are trying to unload or a bank property. Also property taxes are way too much here as well. It never ends.
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We got room for you here in Texas my friend.
4.5 is higher than before, but it still isnt a bad rate. dont let it get you down.
heck... when i was buying my house 4.5 would have been the best rate around.
at 4.5%, my rate (a bit higher than that) still isnt low enough to make a refinance worth it after closing costs fees and what not especially since we dont want to be in the house for more than 6 or so more years.
4.5 may kinda suck comparatively but it still is far from "crazy" or "really bad"
So yes, they're climbing back up slightly, but they had to go somewhere ...
You have to remember too .... summer is the time when people want to move. So lots of houses are going on the market now and the demand is high --- since people want to move before "the kids" go back to school in the fall.
I wouldn't expect rates to go much higher, at least not for another year or two .... and I'd bet you they drop back down next winter.
Bernanke has said "the Fed does not expect to start raising its key interest rate until probably the first half of 2015."
* I have a new address as of 3/24/18 *
You are right that 4.5 is much better than 7 or 8 percent. I remember when my friend in high school got a new house. it was I think 300k or so and though I don't know the exact IR his parents paid with their income it was affordable. Now this was in the late '90s. Today the same houses in that area are up 150k or more, even up to 200k more. That is not right. Plus property taxes have more than doubled too. All of this while wages are going down, and jobs are harder to get and don't pay as much as they use too. Sure 4.5 is not bad but they will only go up. I bought my house at 3.25 and got lucky on that cuz when I started looking it was 3.5. I'm thankful I got in when I did but my house was bought for under 100k than what I paid for. My house was made in the late '70's, so it has seen almost a 150k or more bump through the decades. The people who bought my house before the crash paid something like 259k or something like that. And I'm sure the IR was above 5 percent.
with the fed pumping billions every month to artificially prop up an otherwise volatile and unsure stock market, inflation is inevitable. rates will climb. its a matter of time, and many economists believe it is sooner than most think.
this is the nature of the beast when markets are artificially tampered with.
of course, if you think the interest rates are too high, you can always take action on your own by not buying a house at that rate. if it isnt worth it to you then dont do it.
rent, pay a larger sum of cash for a down, or just pay off the place you live in now at a way faster rate than you payment plan (all extra payments go to principal thus eliminating the compounding interest on the money you paid off). its all about what is worth it to you, life choices, and how much you are (or are not) willing to give up.
historically speaking 4.5 is still lower than almost any time in history. complaining about it seems kinda over reactionary. i mean there has not been a time in the last 50+ years where rates have been this low. In the 90s when your friend bought that house with an "affordable interest rate" the average was about 7.5 with the prime being somewhere between 6% and 8.5% depending on the year
prime rate right now is 3.25 btw.
interest rates will go up thats true, and it does make home ownership a bit more expensive, but i just dont think it has reached the point of sucking yet.
not even close actually.
The bad news is that it is a two year ARM, which means they look at the rates next March at our two year mark. For the majority of our first two years the rates were below 3%, now they're going up!
I'm not happy, but it beats the hell out of 8.5%! Soooo... Phobic, just grab your ankles.
One thing to keep in mind too though is that home prices are relative to where you live. Our towns (Portland and Corvallis, and to a slightly lesser extent Salem) are bubbles in Oregon. I go across the river to Albany and housing prices drop almost 20% in many instances for more house or property. Even Eugene is lower, southern and Eastern Oregon are still pretty depressed. Urban areas are always more expensive, the recession and the Measure 37 (created an avenue around land use and zoning laws) effects temporarily lowered housing prices in the metro areas and kind of reset our expectations. I agree that housing costs in Portland and Corvallis are much too high, Portland due to population pressure and Corvallis due to arrogance and selfishness, but I'm not surprised.
Kuzi, all I was saying that the IR isn't the real issue so much IMO, it's that and the price of homes. Sure it depends on the area that one lives or what have you but really it doesn't matter if 4.5 is near record low, the price of the home is the real issue. And saying just don't buy one at that rate isn't an answer. I mean I guess it is but it's a weak one. Also renting has skyrocketed in my area to the point of it more expensive to rent than to buy a lot of the times. That in itself is wrong.
since the housing crash rent has gone through the roof.
if you can afford a house now i would say go for it. still a buyers market.