Interest Rate Anxiety? Here’s Why You Should Still Buy

BY LANCE MILLER

With financial and real estate news reports riddled with headlines such as “Interest rates hit five-year highs”, it is easy to second guess a decision to buy a new home.

  • In fact, mortgage interest rates are indeed at a fiveyear high and expected to increase further. Freddie Mac reports the average interest rate for a 30- year fixed mortgage will hover around 4.6 percent for 2018 and increase to 5.1 percent for 2019.

    Even though interest rates are likely to remain on the rise, so are housing demand and housing prices. Freddie Mac expects total home sales to increase to 6.44 million units in 2019 compared to 6.32 million units and projects a 3.1 price appreciation rate in 2019. In many markets, buying is expected to remain cheaper than renting, even as interest rates increase.

  • Websites such as Trulia.com and Realtor.com offer buy vs. rent calculators, which allow you to factor in multiple factors, including mortgage interest rates.

    Rising interest rates often result in increased demand for homes, as buyers who are undecided jump into the market before rates increase further. As home prices and interest rates are projected to increase over the next 18 months, don’t let interest rates deter you from buying now. Although rates are higher than they’ve been, buying a new home is still a great option for many potential home owners.

Lance Miller is CEO of Momentum Loans.

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