Interest Rates: When to Buy

When my parents bought a home in Denver back in 1964, they borrowed money at about 7%.

When I was first licensed to sell real estate in the early 1980’s, rates were in the mid-teens and we were seeing the advent of adjustable-rate mortgages.  ARM’s allowed borrowers to qualify at a lower rate while spreading out the risk for the lender.

Historic Interest Rates

Since 1981, after reaching a high of nearly 19%, rates have steadily declined.  Like all trends, it’s not a straight line.  You may have noticed that when rates spike up a little, pundits (mostly lenders and brokers) will say “hurry up and buy/sell before rates go up further!”  Then, when rates go down you hear “buy/sell now before rates go back up!”

I’m writing this now because people in my business are starting to wring their hands again about interest rates, the Fed, etc.  Stuff nobody can do anything about.  And maybe it doesn’t matter that much.

When to Buy or Sell

In over 30 years and hundreds of transactions, here’s what I’ve learned:  almost nobody buys or sells just because interest rates are a certain way.  Buyers will buy and Sellers will sell regardless of where rates may be.  That’s because the financial benefits of home ownership still outweigh the (temporary) costs of higher rates, and the real reasons people move (changes in family, job, age, etc.) don’t usually allow a buyer to wait until interest rates are perfect.  You can always refinance.

Bottom line:  the right time is whenever you need to do it.  

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