{"id":2164,"date":"2018-03-22T10:00:11","date_gmt":"2018-03-22T10:00:11","guid":{"rendered":"https:\/\/thezakariagroup.com\/freddie-mac-rising-mortgage-rates-do-not-lead-to-falling-home-prices\/"},"modified":"2018-03-22T10:00:11","modified_gmt":"2018-03-22T10:00:11","slug":"freddie-mac-rising-mortgage-rates-do-not-lead-to-falling-home-prices","status":"publish","type":"post","link":"https:\/\/thezakariagroup.com\/freddie-mac-rising-mortgage-rates-do-not-lead-to-falling-home-prices\/","title":{"rendered":"Freddie Mac: Rising Mortgage Rates DO NOT Lead to Falling Home Prices"},"content":{"rendered":"
\n

\"Freddie<\/p>\n

Recently, Freddie Mac<\/em> published an Insight Report<\/em> titled Nowhere to go but up? How increasing mortgage rates could affect housing<\/em><\/a>. The report focused on the impact the projected rise in mortgage rates might have on the housing market this year.<\/span><\/p>\n

Many believe that an increase in mortgage rates will cause a slowdown in purchases which would, in turn, lead to a fall in house values. Ultimately, however, prices are determined by supply and demand and while rising mortgage rates may slow demand, they also affect supply. From the report:<\/p>\n

\n

\u00a0\u201cFor current homeowners, the decision to buy a new home is typically linked to their decision to sell their current home\u2026 Because of this link, the financing costs of the existing mortgage are part of the homeowner\u2019s decision of whether and when to move. <\/em><\/p>\n

Once financing costs for a new mortgage rise above the rate borrowers are paying for their current mortgage, borrowers would have to give up below-market financing to sell their home. <\/em><\/p>\n

Instead, they may choose to delay both the sale of their existing home and the purchase of a new home to maintain the advantageous financing.\u201d<\/em><\/p>\n<\/blockquote>\n

The Freddie Mac<\/em> report, in acknowledging this situation, concluded that prices are not adversely impacted by higher mortgage rates. They explained:<\/p>\n

\n

\u201cWhile there is a drop in the demand for homes, there is an associated drop in the supply of homes from the link between the selling and buying decisions. As both supply and demand move together in this way they have offsetting effects on price\u2014lower demand decreases price and lower supply increases price.<\/em><\/p>\n<\/blockquote>\n

They went on to reveal that the Freddie Mac National House Price Index<\/em> <\/strong>is\u2026<\/p>\n

\n

\u201c\u2026unresponsive to movements in interest rates. In the current housing market, the driving force behind the increase in prices is a low supply of both new and existing homes combined with historically low rates. As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.\u201d<\/em><\/p>\n<\/blockquote>\n

The following graph, based on data from the report, reveals what happened to home prices the last six times mortgage rates rose by at least 1%.<\/p>\n

\"Freddie<\/a><\/p>\n

Bottom Line<\/strong><\/h3>\n

Whether you are a move-up buyer or first-time buyer, waiting to purchase your next home based on the belief that prices will fall because of rising mortgage rates makes no sense.<\/p>\n<\/div>\n

Powered by WPeMatico<\/a><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"

Recently, Freddie Mac published an Insight Report titled Nowhere to go but up? How increasing mortgage rates could affect housing. The report focused on the impact the projected rise in mortgage rates might have on the housing market this year. Many believe that an increase in mortgage rates will cause a slowdown in purchases which […]<\/p>\n","protected":false},"author":101010,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[110,98,99,102,104,101,108],"tags":[],"jetpack_publicize_connections":[],"yoast_head":"\nFreddie Mac: Rising Mortgage Rates DO NOT Lead to Falling Home Prices - The Zakaria Group<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/thezakariagroup.com\/freddie-mac-rising-mortgage-rates-do-not-lead-to-falling-home-prices\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Freddie Mac: Rising Mortgage Rates DO NOT Lead to Falling Home Prices - The Zakaria Group\" \/>\n<meta property=\"og:description\" content=\"Recently, Freddie Mac published an Insight Report titled Nowhere to go but up? 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