Most people are probably tired of hearing about the current home mortgage rates. Everyone knows they have been raised four times this year and the Fed may raise them a fifth time in the next day or so.
But one of the unintended consequences we are facing right now of very low mortgage rates prior to 2022, is that many homeowners across all spectrums of life have record low mortgage rates. Some as low as 2.25% and the people with these low mortgage rates aren’t going to be moving anytime soon and giving up that low rate.
So what does this do to the housing market?
Well, first of all it will continue to keep housing supply down. Even if you have a growing family and you need more room. Most people will figure out away to stay in their home and possibly use the equity in their home to add on instead of move.
Another unintended consequence is the fact that we have now created a culture of people who believe the artificially low mortgage rates should be the norm.
The average mortgage rate starting in 1971 to 2022 has been 7.76%. We are not even close to this rate as of today and the market has totally freaked out at the current rates.
One analyst calls these record low mortgage rates the poison pill to the housing market. Because the housing market has cycles. People throughout their life are upgrading and downsizing depending on where they are in their life. And with record low mortgages fixed at these extremely low mortgage rates people will stay put which impacts the entire marketplace.
To your success and your future.