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The Wild Ride of Interest Rates

Jason O'Neil

By Jason O’Neil

Sit tight. Last week mortgage interest rates jumped drastically. Some say without warning, but then again, most have been preaching for months, if not years, that rates can’t stay this low. Can they?

Why did they rise? Is Wall Street fed up? Was the Federal Reserve testing the market’s tolerance with some well thought out comments?  “The downside risks to the outlook for the economy and the labor market have diminished,” said Federal Reserve Board Chairman Ben Bernanke on June 19.  Will the Fed begin to unwind its efforts?  Time will tell the answer to all of these questions. But I do assure you that the ride is not over.  As we’ve seen in years past, there is always a secondary action to the immediate (usually over-reaction) reaction.

Rates will likely dip again and level off in a somewhat upward trajectory. We have likely seen the record low rates come and go.

This happens. It is the cycle. It is not doom and gloom. Rates are still low and people are still interested in buying houses. In fact, I typically see an uptick in home sales immediately after an interest rate rise as homebuyers fear further increases.

As real estate professionals, we don’t have all the answers when it comes to the future of interest rates, but we owe it to our clients to partner with mortgage professionals who are pro-active and knowledgeable about their industry. Rates will be what they will be, and while they have an impact, they certainly are not the largest reason that someone should or should not buy a home.

Jason O’Neil is an associate broker with Encore Sotheby’s International Realty in Indianapolis. Connect with him at jasononeilrealtor.com.

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