You can't open a newspaper, log on to an internet news site or turn on the car radio without hearing about rising mortgage rates. It's everywhere. It's relentless.
There's a bit of panic in some of those voices. You'd think rates were rising to record heights. You've heard it... "Refinance that ARM right NOW!" or "If you don't buy now, you'll never be able to afford to!"
So how bad are the rates right now? FreddieMac has been gathering data on the 30 year fixed rate since 1971. Being an engineering type in a former life, when I see a big spreadsheet of numbers, I just have to plot it. And plotting the 30 year fixed rates over time yielded an interesting chart. I put this up on The Phoenix Real Estate Guy and it was snapped up by some pretty big dogs of the real estate blogging world.
So since many of you can't get off of AR long enough to visit an "outside blog", I share the chart here for you. You are welcome to use it (with proper atribution of course!) as you see fit. You can even download it from our main web site, www.ThompsonsRealty.com (where it's much larger and easier to see). Making this chart reminded me that the first house I bought in 1985 was financed at 14%!
So next time you have a client in a near panic about interest rates, you can gently remind them that from a historical perspective, rates are still very low. They should be glad it's not October of 1981 when the 30 year rate was a staggering 18.45% (would love to hear from those out there in this business at that time!)
Ah Jay,
I actually sold a $60,000 house with an 18% mortgage. VA. The seller also paid 10 points. The good old days! That was back in 1982. We were very creative in those days.
And, because homes were not selling I ended up in property management. We rented out the homes. In some cases for many years, until the market improved enough to sell them.
And, as a surviver I can tell you it wasn't funny nor easy.
Fear sells. The really unfortunate part is that most of those advertisements are from large call-center lenders. Typically their staff doesn't know how to really help a consumer understand if they should refinance or not. The customer comes in overly focused on interest rate and the "sales person" gives them a lower rate....but perhaps that isn't really the best thing for the homeowner.
Ken Stampe HomeLoanDFW.com
While the interest rates back in the day were higher than rates of today's market, we need to realize that the price of houses back then were not as steep as they are today. It would be interesting to plot out the average price of houses starting 30 years back until today. I can then chart out a 30 year payment and put things into perspective for all of us. I will make that my mission for tonight, so check it out.
As far as these call center loan officers using scare tactics to cohourse people into refinancing and/or buying a home for a mere 3.5% it is a bunch of junk! I am a loan officer myself and I DO NOT believe in Option ARMs or refiancing someone just to put a buck into my pocket. That only leads to confused, angry clients, who wouldn't refer someone to me to save their life. I INTERVIEW my clients to find out their goals today and ask them where they foresee themselves in 10 years. It helps me structure their loan around them. I am in the business for referrals, to make peoples dreams come true, to help someone stay out of foreclosure etc. I am not in the business to take advantage of someone unlike some of these "loan officers".
Hillery,
Hopefully the Active Rainers here are all like you!
I think a lot of loan offices (and Realtors) get a bad rap for the sleazy few that are out there, ruining people's lives.