Take the “soaring” mortgage rates posted in this article, for example. There was a time when homeowners would have refinanced their existing mortgages to get DOWN to the 5.29% rate cited here.
My first mortgage was 12%. My current is 2.875%
You are right, perspective is important.
I think there are concerns that mortgage rates are rising, and fears that they will go a lot higher. If they level off in the 5 to 6 percent range, we would all be happy.
The combination of higher rates, plus a housing market in which prices are the highest in history, makes for a tough situation for today’s home buyers.
The key metric would be compare the average monthly home payment on newly purchased homes (new or existing) to the median monthly income.
That is probably the worst it has been since at least the Carter years.....
Sometimes, it seems that whining about “doom and gloom” is just an excuse for doing nothing.
When my wife and I bought a development house in 1975, we had to finance it with a 30-year mortgage at 13.5%. That was the “market rate”.
At first, we “stretched” to make all our mortgage payments on time. I took a week-end job. We had no vacations, no restaurant meals and no major purchases for two years.
Instead, during that time, we created “sweat” equity. My wife and I repainted our entire house, inside and out. We rebuilt our tumbled-down seawall and we reinvigorated our garden.
As interest rates went down, the value of our house jumped. The value of our EQUITY increased so much that when we sold that house, we had enough equity to allow us to buy TWO houses: a big “Beaver Cleaver” colonial and a ski-house in Vermont. We have bought and improved many houses since then, each time at a profit.
Our children have also profited from creating their own “sweat equity” as they moved from their small “starter homes” to bigger and better “family homes”. Their progress proves to me that it can still be done.
So, my advice to the doubters is: collect your tools and just DO IT!
When I bought my house in 82 the mortgage rate was 12 percent. Years later I learned that some bankers liked to buy houses when the rate was high and few people qualified. They knew the rate would go down as mine certainly did. It went to 4.8 and now it is 3.25.