Interest Rates and the Theory of Relativity
So, today as Janet Yellen exits her position as Chairman the Federal Reserve decides to keep interest rates where they are for now. Interest rates have been slowly edging up and as we enter the spring market there is still a lot of economic uncertainty so predictions say that the housing market won’t see as much of an increase in the spring as we might expect.
Historically though interest rates are still extremely low. Most of us Baby Boomers well remember interest rates as high as 18%. When I first became aware of real estate and when my first husband and I were contemplating buying a home in 1982/3 interest rates were 18.5% (yikes) but the monthly mortgage payment was still below rents in the area and you could write off the interest from your payment on your taxes.
A few years later I bought my first house and interest rates were 12% but the monthly payment was still lower than rents. When I changed jobs I had to refinance and rates were down to 10.5%.
Compared to today when you can get a 30 year fixed rate loan for as low as 4.5%. Over the past few years I’ve seen a 30 year fixed rate mortgage as low as 3.95% so yes today’s rate is marginally higher than the last few years but compared to 25 years ago they are incredibly reasonable.
One thing remains constant between 1982 and 2018 though. People need to live somewhere and buying a home is still one of the best hedges against inflation and the best way to grow wealth. Since you have to make a monthly payment anyway, it might as well be fore something you will someday own.
If you are thinking of buying or selling an home in Maryland give us a call at 410-292-0100 or start your search here and we'll talk about the market conditions and what your home could possibly be worth in today's market place if you are thinking of selling. If you are considering buying a home, there is no better time than now to buy. The tax savings and wealth building alone is worth the plunge into todays market. Remax New Beginnings and I are connected with some of the brightest and best real estate agents in the world and can assist with your move here in Maryland or anywhere in the United States or abroad. Ask me how.
June Piper-Brandon ~ Associate Broker ~ CDPE, CIAS, ePro, MRP
Long & Foster Hampden
410-292-0100 - Direct 410-889-9800 Office