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Hughes Shelton Group
Hughes Shelton Group
Thursday, 04 May 2017 / Published in General, Housing Market, Investors, Local, Mortgage, News, Real Estate, South Tampa, Tampa Bay

When will mortgage rates rise? What happens when they do?

NEW YORK –  At some point, mortgage rates will rise again.

Americans have, so far, been resilient to rising mortgage rates, but a bigger impact could come soon, say Goldman Sachs economists.

Housing’s share of the economy rose above normal levels from November to January, despite mortgage rates surging 60 basis points at the time.

Still, economists caution that there may be a lag to the impact of rising rates and particularly their effect on home prices. In an analysis – pulling data from past 100-basis point increases in mortgage rates – economists found that the median home price often drops 3 to 4 percent.

“This median estimate suggests that the recent 60 basis point rise in mortgage rates should, all other things equal, lower house prices by 2 to 3 percent,” the Goldman analysts concluded. “This estimate thus supports our forecast that national house prices will continue to rise, but at a slower pace in the next few years.”

That said, buyer demand is much stronger than supply at the moment and the economy and job growth are continuing to support the housing market.

“The housing market is also in a more virtuous cycle: Home equity has recovered, mortgage rates remain low enough to be manageable, and high rents make homeownership attractive,” MarketWatch reports.

Many economists are skeptical whether mortgage rates will actually rise much more than they did earlier this year. A survey conducted by MarketWatch in December 2016 showed an average for rates of 4.5 percent throughout 2017, or a half point higher than last week’s low that averaged 3.97 percent.

Source: “Here’s How Home Prices May Respond to Rising Mortgage Rates,” MarketWatch (March 7, 2017)

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Hughes Shelton Group is a team of real estate agents affiliated with compass, a licensed real estate broker and abides by equal housing opportunity laws. all material presented herein is intended for informational purposes only. information is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. no statement is made as to accuracy of any description. all measurements and square footages are approximate. this is not intended to solicit property already listed. nothing herein shall be construed as legal, accounting or other professional advice outside the realm of real estate brokerage.

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