Interest Rates Headed Higher

Troubled Assets

Interest Rates Headed Higher Interest rates have gone up in the recent past. With that, there are those out there waiting for rates to go back down. Unfortunately, they may have to wait decades for that to happen. Future interest rates, as projected by Freddie Mac, are shown in this graph. As time progresses, buyers will have to pay progressively higher interest rates.

When talking about this, some people ask me if these higher interest rates will cause home prices in the Portland metro area to go back down. Higher interest rates will definately create a headwind for housing prices (most buyers buy the payment, not the house price, and a higher interest rate will increase the monthly payment). At the same time, however, economic growth in Portland has been increasing, its unemployment rate decreasing, and the general mood of the market is more optimistic. Further, with our current level of low inventory (3.1…

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