Recently, we’ve talked a lot about the rising interest rates. Everyone seems to be in panic mode over it, and my friend Jay Vorhees of JVM Lending is here to explain – in a historical context – why the reaction is overblown. He says the only people who should really be worried are businesses and companies that focus only on refinancing.
We’ve already touched on why higher interest rates are good, but an interest rate under 6 percent is amazing when put in a historical context, and should be treated as such. Here is a graph from Freddie Mac that shows an in-depth breakdown of interest rates over the past 30 years, but we’ve also shared JVM’s table on interest rates:
DATE RATE COST
March of 2017 4.2% 0.5 Points
April of 2014 4.34% 0.6 Points
2008 (entire year) 6.03% 0.6 Points
2000 8.05% 1.0 Point
1995 7.93% 1.8 Points
1990 10.13% 2.1 Points
1985 12.43% 2.5 Points
This shows that not only are rates much lower than they have been at the highest points of the market, but that loans are also much lower than usual – yes, I know our prices are higher than most of the country, but higher interest rates, always hurt you in the pocket book more than higher prices. Anytime you can lock in a rate below 6 percent, you are doing quite well. So maybe now is the time to get into the market!