WHAT'S HAPPENING WITH MORTGAGE RATES?

Dated: July 9 2022

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WHAT IS HAPPENING WITH

MORTGAGE RATES?

As inflation rises and mortgage rates climb,

many may see their purchasing power shrink

and their dream of homeownership fade.

However, it’s important to remember one big piece of economic wisdom: there is no better hedge (GAIN) against inflation than homeownership. Take a look a this chart to show home ownership wealth in appriciation increases vs inlfation cost over 50 years.

Historically, we have seen homeownership outperform inflation in most decades. So if there’s an asset to invest in, housing is one of the few tangible assets that tends to hold its value.

WHAT WILL WILL HAPPEN TO REAL ESTATE IF WE GO INTO A RECESSION?

Historically, we have seen homeownership outperform inflation in most decades. So if there’s an asset to invest in, housing is one of the few tangible assets that tends to hold its value.

Post-2008, nothing will strike fear into the hearts of buyers and sellers like the word “recession.”

But again, historical context is everything. Take a look at the chart below for some serious perspective.

In 4 out of the last 6 recessions, home prices have continued to appreciate. So, if a recession happens, it does not necessarily mean home prices will decline. This is one of the most important pieces of information you need to be getting out right now.

The BIG takeaway if a recession happens:

interest rates usually go up at the beginning of an

economic decline, but in order to stimulate the

economy, they will typically fall. According to Fortune,

“Over the past five recessions, mortgage rates

have fallen an average of 1.8 percentage points from

the peak seen during the recession to the trough. And

in many cases, they continued to fall after the fact as

it takes some time to turn things around even when

the recession is technically over.”

So, while the days of mortgage rates below 3% may be over,

we also can’t say for sure they’re only going to go up from here.

WHAT’S GOING TO

 HAPPEN?



Yes we are in a slow down, however we are really just
heading
back toward the market pace we saw pre-
pandemic, and those
years were still great years for
real estate and howe ownership.
.

SHOULD I BUY A HOME?

This is probably one of the biggest questions you’re
asking yourself right now, and it’s never been more
important to have a good resources for it. For all the
reasons we mentioned above, the short answer to this
question is yes.

Blog author image

Cynthia Chugg

Cynthia Chugg has been a long-time resident of the Magic Valley; born and raised here, and is so excited to be turning her community focus towards real estate. With a passion for service, Cynthia is r....

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