Content provided by Paula Wieck, Manager of Investment Research
Looking to buy a new house? Holding off because mortgage rates have climbed over a staggering 1 percent since May? Are you checking mortgage rates daily – and cringing, feeling like you dropped the ball on a great buying opportunity?
Here’s something to make you feel a little better. Although rates have climbed recently, housing affordability is still near historic highs. Yeah, it may not look as good as it did several months ago, but when you take a longer-term perspective, I believe today is still an excellent time to buy that new house.
Trying to time interest rates is similar to trying to time the stock market. It’s near impossible to get it right. While the hike in mortgage rates in recent weeks could slow activity in the housing market temporarily, as potential buyers become spooked, the underlying reason individuals are looking to buy a house has not changed, for the most part. In my opinion, housing still remains a bright spot in the economy, as the sector should still grow at a decent pace in the long-term.
In addition, with house prices increasing year-over-year at 12 percent, consumers will likely continue to feel good about their household balance sheets for a while, supporting consumer demand, which is supportive of the economy and equity markets.
In the coming months, rates could be range-bound and experience a short-term decline or continue to edge up slowly. The consumer should still feel good about buying a new house, as mortgage rates are still below the 13-year average.
Feel any better?