by Jeanette Joy Fisher

It seems that the media is intent on filling the airwaves and publications with the thoughts of various doom-and-gloom economists who are heralding the recent rise in interest rates as the beginning of the end for America's real estate market. However, when taken in context of not-that-long-ago historical terms, today's interest rates were only to be dreamed of a couple decades ago.

If you're old enough to remember the dismal state of the American real estate market back in the 1980s, you'll recall that in 1981, the average 30-year mortgage rate was 16.63%! That made it very difficult for a great many buyers to qualify for home financing, and slowed home sales to a crawl. Taking that into account, compare that mortgage rate to the predicted rate for 2007, which is 6.7%. Even when rates began to fall during the 80s, in the 1991, the average rate was still at 9.25%, which was still considerably higher than what homeowners can expect to pay in the coming year. Shaving off three percentage points can make a huge difference in a buyer's monthly payments, and makes homes much more affordable than they were in the 80s, even when inflation is factored in.

When taken in the proper perspective, current rates and those predicted for the coming years still look like pretty good deals for investors and homeowners, even if they have crept up slightly from 2004, which saw rates average 5.84%. Unless a buyer is thinking about the purchase of a megahome, backed by a huge mortgage, paying less than one percentage point more won't generally be a deal breaker when considering whether or not to buy a new home.

Contrary to the pessimistic talk throughout the media, there is actually good news regarding mortgage rates over the next few years. For instance, a recent forecast by the Mortgage Bankers Association predicted that mortgage rates are only expected to average about 6.8% by the end of 2008, which represents an increase of only .1% over the coming year. Although the media isn't talking about it, for whatever reason, that's actually very encouraging news for anyone involved in any facet of real estate.

It's hard to understand why the media has decided to jump on the negative bandwagon when it comes to the real estate market. Many areas of the country are still moving forward when it comes to prices, and interest rates are still quite low by historical standards, and all indications are that they're not going to rise significantly over the next couple years.

The bottom line? If you're thinking of buying a home for yourself or as an investment, don't let the naysayers in the media convince you that this is a bad time to take the plunge, especially when it comes to interest rates. In fact, this is one of the best times in history, from a financing standpoint, to look at homes. Price may be falling somewhat, since the double-digit increases where never sustainable in our supply-and-demand economy, but that, combined with historically low interest rates, puts you in one of the best buying positions of the past several decades!

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Copyright © 2006 Jeanette J. Fisher
America's "Dream Home" Maker