Between the natural disasters we've recently experienced to the more mundane items like the
potential increase in interest rates, there's no telling what will happen to home sales in 2018.
Additionally, a greater percentage of these mortgages were variable - rate, increasing the chance that borrowers would not adequately plan for
future increases in interest rate costs.
But the downturn in the 1980s was caused by the sudden and massive
increase in interest rates by the Paul Volcker - led Federal Reserve, not a meltdown of the global financial system.
Among the largest risks to values for seniors housing are (1) the external events of the broad economy and its pace of expansion as well as (2) the movement and pace
of increase in interest rates.
But it's still worth keeping in mind that the Fed's newest interest rate could still pose an uptick in credit card rates (remember, credit accounts are likely to
see increases in interest rates as opposed to savings and deposit accounts).
Locking your mortgage interest rate also protects you from
increases in interest rates while your loan is in process, but it will also not allow you to benefit from any drops in mortgage interest rates.
Most homeowners and real estate professionals may not realize that small incremental
increases in interest rates don't play as much of a role in the life of the loan overall balance, as in how you make your mortgage payments.
A
gradual increase in interest rates is the best way to deal with inflation and support the U.S. economy, Loretta Mester, president and CEO of the Federal Reserve Bank of Cleveland, told CNBC Thursday.
As you can see, the one percentage point
increase in interest rates results in a loss for Year 1, but by Year 2 the cumulative return turns positive because interest and principal reinvest at higher rates.