What Happens if Mortgage Rates Keep Rising?

House key and model home

If you are shopping for a new home, you’re probably watching two games at the same time: one game is the MLS (Multiple Listing Service), scanning for properties using apps like Realtor, Redfin, Trulia, Zillow, and such.  The other game you’re likely to be watching is mortgage rate tables.  This is like watching the Red Sox / Yankees game on one screen and the Patriots / Bills on another.  The tension comes from trying to keep score in two completely different stadiums.

In the mortgage stadium there is a trend taking place as of the date of this article – mortgage rates are rising.  But home buyer, don’t despair!  According to Peter Miller of The Mortgage Reports, today’s home buyers should take this into account:

“There’s no mistaking that mortgage rates have been on the rise in 2022. But if you look at a historical mortgage rate chart…Today’s rates are still low. Really low. Historically, 30-year mortgage rates have averaged just under 8%. So even though today’s rates are inching past 4%, they’re still a great deal comparatively.”

Why own a Rochester, NY home?

There was a time, in the early 1980’s, when Sharon and I bought three homes in a row when mortgage rates reached high double digits.  As this chart conveys, the record high for 30-year fixed mortgages was 18.63% in October of 1981 – and that was the average rate for borrowers with good credit ratings.  For those with mediocre credit scores the 30-year fixed mortgage rate was as high as 21%.  Nevertheless, Sharon and I bought in 1977, then in 1980 and again in 1985 – even when all three of those mortgages were above 10%.  Why did we do that? 

We did that because there was no other way – it was the only way to own a home.  And we did that because we still made a good profit with every transaction as we moved from a good house to a better house.  This was at a time when the quickest and safest way to build a nest egg – a retirement portfolio – was to buy, hold, sell, buy, hold, sell – repeatedly.  It worked for us every time.  While home prices vacillate to some degree, they don’t crash as much as 20-30% like Wall Street does.  Over time, the vast  majority of homes keep rising in value. 

Over time, the vast majority of homes keep rising in value

Every homeowner needs to be aware of the condition of their neighborhood and of housing market trends affecting future value of their home.  In cases where homes are losing value for external reasons, the homeowner has to be decisive and cut his/her loses by moving to a better neighborhood as soon as possible. 

What’s happening to mortgage rates now?

We see that the Federal Reserve Bank will be raising interest rates in the next several fiscal quarters.  This means that all borrowing rates will rise as well.  It is likely that mortgage rates will reach and exceed 5.0% later this year (2022) and next year (2023). Quoting Elizabeth Weintraub, “The Fed’s moves aren’t totally irrelevant…They tend to have a delayed and indirect impact on home loan rates.”

The advantages of home ownership

One great advantage of every homeowner is that we all enjoy a tax deduction for the mortgage interest we pay every year.  That alone is an advantage over renting.  While a case can be made for renting instead of buying, it gets quite complicated to get ahead by renting unless the renter is scrupulously saving money and buying equity elsewhere.  Current mortgage rates today are so low that it actually pays to take out a mortgage and use the opportunity of the cost of the borrowed money to channel the borrowed home equity into investments that yield better results than the 3.75% or 4.0% cost of the 30-year fixed.

Owning real estate (your own home and / or an income property) is the very best way to invest – secured by the safety of land ownership.  Is it true that land and real estate can lose value?  Yes – but is there any habitable land that loses 100% of its value?  Every year a very large number of stocks decline to zero in value as the bankrupt companies they represent lose 100% of their value. 

How then do we look at the current state of the housing market as of early 2022? 

One area of concern is supply chain problems. Those are real problems but, in our opinion, they are transitory and will resolve themselves over time.  Necessity is the mother of invention and many of those material, manufacturing and transportation process issues will be settled via extraordinary ways of thinking and innovation.

Did we experience risks when we bought and sold houses during the late 1970’s and mid 1980’s when mortgage rates were at record high levels?  Yes.  But the way we see it – everyone needs a place to live.  There are basically two ways to have a place to live – you own it or you rent it.  We decided to own it. And it has paid off handsomely for us even as we write this.

But as you read this, mortgage rates are still well below the “average” 8% rate that reigned for decades.  Who can predict that they will go any lower under current conditions of inflationary pressures on the Federal Reserve?

If we can buy, hold, sell, buy, hold, sell during a time of double digit 30-year fixed mortgage rates – what’s keeping you from owning your own home?  Just buy it.

Crossgates Properties can help you purchase a home

Every member of our team has a passion for identifying interesting real estate projects in the Rochester, NY area and renovating them into very desirable finished properties ready for occupancy.  

Our finished products are attractive, affordable and efficient. Since inception, Crossgates has pledged to create and maintain great working relationships with Rochester community leaders and housing professionals.

Meet the Crossgates Properties, LLC Team

  • Sharon L. Martinez
  • Luis A. Martinez
  • Brad K. Martinez

Do you want more information on buying homes in Rochester, NY? Contact us today at [email protected] or call(585) 485-8278.


Miller, Peter – Mortgage rate charts: Historical and current (1975-2022)  – The Mortgage Reports Contributor, March 22, 2022  https://themortgagereports.com/61853/30-year-mortgage-rates-chart

Weintraub, Elizabeth –  How Are Mortgage Rates Determined?  The Balance, December 04, 2021

Zelkadis Elvi – Why Mortgage Rates Once Reached a Sky-high 18.5% – Yahoo Finance, Just Explain It, November 22, 2013 https://finance.yahoo.com/blogs/just-explain-it/why-mortgage-rates-matter-152241574.html

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Crossgates Properties, LLC
P.O. Box 242
Pittsford, NY 24534
[email protected]