The interest rates have been gradually increasing over the past month, and with that change has come a sense of urgency. Many families have expressed a sense of urgency to pay off as many bills as they can, and in addition they have also made hardcore decisions about their overall finances. Many who wanted to try to refinance have decided that they are going to make a move, and those who were going to put off buying a home have decided to go ahead and make a move. With interest rates on the rise, the question has become "won't high rates make the housing market worse?"
Why Are Rates Going Up?
It's no longer a mystery why rates are going up, but it took a little time to catch on. Many thought we were on the verge of a strong recovery and while we wish that were the case it just isn't the reason we see rates going up. However, while rates are going up it is only very slightly. Interest rates are not jumping by large limits, but they are climbing every week it seems. The reason? Inflation. Turning on the printing presses is going to drive up the cost of everything simply because we will need to raise the money to cover it. So, there will be higher rates on everything from home mortgage loans to car loans and even credit cards. Just as you were getting notices in the mail about how to pay off your account quicker and how long it would take you to pay off your minimums you are now getting a nationwide warning regarding the increase in interest rates.
Why Higher Rates Could Help the Housing Markets
An increase in interest rates will generally not affect the market negatively in the beginning, and the reason that it doesn't is because it will spur families to make a move quickly. There is motivation to get people to refinance, and to get moving if they were looking to buy a home. The challenge used to be that families would sit and wait until they thought rates would change, and then when they would drop they would change again, then they would go back up. This resulted in a frustrating waiting game for all parties involved and to make matters worse the income documentation would expire. This would spur a new paper trail making it frustrating for the borrower because they would need to take time out of their busy schedule to make copies of new paystubs and many other documents that are time sensitive. This is why we now know that with rates being so low this is the best time possible to refinance if you need to or to go ahead and move on buying a home before it gets more costly.
We can use a spurt in the housing market, and I don't know that I care how we get it as long as everything is done properly and the information is accurate. After the first of the year most industries need a pick me up, and right now this would be a really great time to see things pick up in the housing industry.