Perspective On Interest Rates

Jay Vorhees at JVM Lending shared a blog about interest rates recently, which I want to discuss further here. You can see Jay’s blog at JVMLending.com right here. Basically, Jay acknowledges that rates are about 2% higher than they were when they bottomed out after COVID first hit. They are back to 2009 levels now, but that doesn’t necessarily mean they are “high.”

When you look at the rates over the last 50 years (see below), you see that current rates are still very low compared to many other eras since 1971. By the end of the 1970s, the average rate was over 15% and over 18% by 1981. In fact, throughout the 1980s, rates hovered around 10% while the economy boomed.

Even in the 1990s, when many people reading this blog may have been purchasing a home, rates were around 8% with the occasional dip below 7%. The rates as we know them now only dropped into the 5% range after the 2008 economic collapse. I bought my first home in 1992, we paid 8 % interest and then refinanced about 7 times over the years. Initially it was an interest only loan. It wasn’t until I divorced and bo0ught him out of the house that I financed into a fixed rate.

So, yes, rates are a little higher than our recent “all-time lows,” but they are still MUCH lower than they have been in decades past. Hopefully that helps put it into perspective a little bit. Rates are likely fall in the next year as there is a lot of talk about a recession, so these current higher rates might not last long.

I highly recommend the link below Barry Habib has an amazing track record on predicting the future of the mortgage industry. To learn more about the rates, recessions, and demand, watch the video linked below. Barry Habib, who comments on mortgage and real estate markets on TV regularly, has some interesting information to share:

https://thenationalrealestatepost.com/barry-habib-calls-it-again/

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