The End of Low Rates?

The biggest year-end story in real estate was undoubtedly rising mortgage rates.  Rates bottomed in July and rose slowly until the election when they went ballistic with one of the steepest rises we have seen in the past 8 years. Whenever we get an outsized move like that there is a lot of anxiety. Many people are projecting much higher rates this year and an end to the historic 'Low Rate Era' of the past 10 years. While the rise in rates is unsettling it is important to keep things in perspective. The chart below shows the swing lows and highs in mortgage rates since 2009. The recent rise brings us closer to the middle of the 8-year range. With the FED projected to raise rates three times in 2017 an upward bias in mortgage rates is expected, but even so, there is further to go before rates break out of the current multi-year range. Until that happens, rates are still very low with the potential to make lower lows in a future economic slowdown.

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