Higher Mortgage Rates Could Revitalize Smaller Home Sales


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The Motley Fool – Jordan Wathen

It’s a billion-dollar question: Following a 30-year bull run in bonds and falling interest rates, can the housing market survive a rising-rate environment? Rising rates have a direct impact on housing affordability. Mortgages at a 5.5% annual rate are 12% more expensive than at a 4.5% rate. At 6.5%, monthly mortgage payments are nearly 25% more costly than at 4.5% As rates go up, the amount a buyer can afford to spend on a home goes down, all else equal. But will it put a damper on a real estate recovery? Bond values weren’t the only thing going up over the last 30 years. Data obtained from the U.S. Census shows the average newly built American home swelled in size, too.

The average home built in 1975 was 1,535 square feet. By 2010, the average build came in at 2,169 square feet. What’s behind…

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One thought on “Higher Mortgage Rates Could Revitalize Smaller Home Sales

  1. Pingback: Best Current Home Mortgage Interest Rates – 5 Insights On Finding The Best Rate | Kentucky USDA RHS Rural Housing Mortgage Loans

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