•  – A rise in rates was inevitable.
  •  – We’re still nowhere near the historical 40-year average rate.
  •  – Millennials, in particular, may need a little perspective on this current market.

darren-nolander-interest-rate-riseInterest rates are on the rise. This is a simple fact – and one that is likely to continue, no matter how much we wish it wouldn’t. Now that the elephant in the room has been unveiled, let’s learn how to live with him. That starts with a little perspective.

We are still in one of the lowest interest rate environments in history! A gradual rise in interest rates will not even equate to the historical average of the past 40 years, which is 8.47 percent. This is a fact we need to share with new clients, particularly Millennials, many of whom haven’t experienced an interest rate environment above 5 percent.

Rising interest rates also means your clients stand less of a chance of losing out on the home of their dreams to an investment group. Many of these groups were able to outbid hardworking couples as they survived on constant refinancing to churn out cash and continue their buying sprees. A rise in housing development, paired with a natural slowdown in applications, will also create a much-needed equilibrium between supply and demand.

It’s easy for potential borrowers to talk themselves out of big-ticket items like homes, cars and other types of investments, especially when the interest rates attached to these items begin to move. While there’s no denying the rise in rates, the barrier to entry for many would-be homeowners isn’t necessarily a financial one, it’s one of perception.

Make sure you give your clients some perspective in the form of plain facts as rates rise, but remain nowhere near the historical average.

Regional Vice President - Southwest

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