Many are warning that there will be a drop in real estate values because mortgage rates are beginning to increase. The logic makes sense. However, history shows that increasing rates have not negatively impacted home values in the past.
Four times over the last 30 years mortgage interest rates have dramatically increased. Here is the impact the increases had on home values at the time:
| Dates | Mortgage Rate |
Home Values |
| May 1983 – July 1984 | 12.63 – 14.67 |
+6.6% |
| March – October 1987 | 9.04 – 11.26 |
+5.2% |
| October 1993 – December 1994 |
6.83 – 9.2 |
+1.2% |
| April 1999 – May 2000 | 6.92 – 8.52 |
+10.9% |
Perhaps the impact of increasing rates on future home prices won’t be as dramatic as some are predicting.