What would you think if I told you that higher interest rates will lead to slightly higher home prices?
In previous years, when rates have risen, home prices also increased nominally. This is what happened when interest rates increased in 1984, 1994, 2000 and 2013. The increases will be driven by higher consumer confidence, a strong hiring market and pent-up demand due to low inventory levels.
Home purchases should not be affected by a small increase in the mortgage rates. The buyers might have to look for a slightly less expensive home, but it shouldn’t make too much difference on whether or not they can qualify for a mortgage most of the time. Mortgage rates would have to rise significantly higher than have been planned in order to have a significant impact on the housing market. Most people agree that even with slightly rising interest rates, prices will increase moderately. The projection is that home prices will increase 4.8% in 2017 period and in 2018 home prices should increase 4.1%