Mortgage rates have risen since the election of Donald Trump, from 3.5% to the recent 4.2%.

 

This has caused some buyers to wonder if they should watch and wait until the interest rates to go down.  However, we must realize that the current rates are still at historic lows. Please see a chart below showing the average mortgage interest rate over the last several decades.

 

 

Experts are calling for mortgage rates to continue to rise. National Association of Realtor’s chief economist, Laurence Yun wrote in an article for Forbs.com “At most, mortgage rates may rise to 6% by the end of 2018. My forecast is for 4.5% to 4.8% by the end of the year and 5.5% by the end of 2018.”

 

According to Laurence Yun, combining home price, income, and the prevailing mortgage rates of the time, along with a 20% down payment, the amount of family income dedicated for principal and interest of monthly housing payments ran at 28% of the budget in the 1980s and 20% in the 1990s and 2000s. Only during the housing market crash time (2006 – 2011), monthly housing payments ran at 15% and both price and interest rate tumbled. “Even if mortgage rates were to rise up to 6%, consumers would still be facing very normal budgetary conditions for mortgage payments.”

 

Yun wrote, “the bonus period is over and will not likely return.”   The real estate market is returning to “normal” and most experts predict that home prices are to rise further.