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2008 All Over Again? No.

A quick note about interest rates.

All over the news today is about the Federal Reserve raising interest rates, ¾ percent. Raising it to highest rate since 2008. Any memory of 2008 and mortgages come to mind? The mortgage meltdown of way too many people getting loans that they really did not qualify to get. In that crisis property values dropped, and many owners mortgage amounts were greater than the real market value of the home. Even scarier was 90% of those homeowners had loans that had adjustable-rate mortgages. That situation made for a glut of homes for sale, a buyer’s market for sure and home prices dropping to get noticed and sold.

The home mortgage market is different this time. Where many people in 2008 were late or not paying on their mortgages at all. Some sources show over 25% of mortgage holders were delinquent in 2008. Today that rate is under 5% and has dropped by 2% in the past year. And the number of homes for sale is at historic lows, a seller’s market. My point is the Fed interest rate impacts car loans and credit card debt far more than mortgage interest rates. Lenders are a competitive lot and when mortgage applications go down lenders will adjust their rates to help increase business.

Follow the 10-year treasury note to get a better gage on 30-year fixed mortgage rates.

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