Projected Mortgage Increases Won’t Affect Property Values, Says Lender

With interest rates projected to rise an entire percentage point in 2018 (according to a recent report, the rate for a 30-yr fixed-rate mortgage is projected to jump from the end of 2017’s 3.9% to 4.9% by Q4 2018), homeowners are starting to speculate about how the increases will affect their property value.

But according to lender Freddie Mac, there’s nothing to worry about. In a recent article about the relationship between rising interest rates and home values, Freddie Mac assured readers that home prices are not directly impacted by mortgage rates.

But how can that be? According to the lender, home prices are determined by supply and demand—not by interest rates. So if demand dips due to rising interest rates, the supply will also dip as people choose to stay in their homes and keep their current interest rate—which will keep prices stable.

The Takeaway

If you’ve been concerned about the rising interest rates and the effect they’ll have on your home’s value, take a deep breath—you’ve got nothing to worry about.