Mortgage Rates Climb to 4.08% in December --
What Should Investors Do Now?
All eyes are on rising interest rates -- and as my Timing Letter subscribers know,
I have been presenting evidence and warning of a possible long-term trend reversal in mortgage rates (to the upside) since mid-2016.
Recent developments in the 30-year mortgage market are starting to support that outlook, as shown in the chart below.
According to the latest Freddie Mac survey, the 30-year fixed-rate mortgage averaged 4.08% for the week ending Dec. 1, 2016.
The 30-year rate averaged 3.93% a year ago at this time - so rates are clearly now trending higher.
Real estate investors without a sound philosophy and superior strategy, of course, are starting to get a little jittery right now because they don't know how higher rates could impact the U.S. housing markets.
Do rising rates signal the beginning of the end for the current housing boom?
Perhaps ... but perhaps not.
Other than those individuals who believe they are gifted with skills that enable them to foretell the future -- who the hell really knows?
The chart above shows that mortgage rates rose 1.30 percentage points in 2013 ... and did that signal an end of the current housing boom?
Clearly it did not, so don't get hung up on not having all the answers right now.
Besides, and as many of you know, interest rates are only one of the five key Vital Sign indicators I use to signal which way U.S. housing prices are likely to move next -- and the numbers say that the trend is still UP for 18 out of the 19 U.S. housing markets I follow.
More housing markets will eventually succumb to falling trends, and I will be reporting those trend changes as the evidence emerges.
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Comments/questions are always welcome - and you can send them to Robert@RealEstateTiming.com