How Do Increased Rates Affect Real Estate Values?

Mortgage rates have been on a continuous upward trend so far this year. Many are asking how long they will continue to increase and at what point they’ll max out. 

We came into 2021 with average rates at their lowest in a considerable amount of time at only 2.65%. While this was a significant decrease from the 2019 high of 4.51%, it’s been unsurprising to see the rates continue to rise over the past few months. 

Despite seeing a slight drop in rates during April, experts estimate that rates will continue trending upward throughout the summer. Some agencies are even predicting that we’ll see rates as high as 3.65% by the end of summer 2021. 

Rates are often driven by key indicators, including unemployment levels, inflation, and retail sales. These indicators provide substantial evidence into the current state of the economy and are therefore involved in the determination of current mortgage rates. 

The rates over the past few months have caused significant confusion in experts across the industry. The Mortgage Reports point out that stronger than expected economic results would likely cause rate spikes in a typical market. In contrast, weaker than expected economic news would likely result in decreased rates. 

While this is the case in a typical market, they point out that our current economic state is anything but typical. As the coronavirus pandemic continues, it continues to cause unexpected changes on a regular basis. Just as quickly as individuals and businesses attempt to adjust to the current environment, new changes come racing around the corner. 

This atypical state of the market is likely responsible for the unexpected drop in rates that was seen in April. In April we saw a decrease in unemployment as more and more businesses receive the approval to reopen their doors, a boost in retail sales, and an increase in inflation due to an increased demand for goods and services. All of these signs would point to an increase in mortgage rates in a normal market. But as previously stated, we’re not in a normal market, and rates fell. 

These unexpected changes that don’t align with the markets made it challenging for experts to predict what’s to come. Our best bet as our country continues to tackle the ongoing pandemic is to expect the unexpected. If anything, this past month has shown us exactly that. 

At Innovative Capital, we specialize in finding unique and innovative funding solutions. In such an unpredictable market, investors and buyers are turning to resources they may not have otherwise to solicit the best possible deal available. This is where we thrive. 

Our unique pool of referral partners includes both traditional commercial lenders and private money lenders. The relationships that we’ve built with our partners have helped us develop the knowledge to easily identify when a deal meets their lending capabilities and when it doesn’t. These close-knit relationships that we’ve developed allow us to be excellent partners not only for our lenders but for our borrowers as well. 

Overall, our goal is to match borrowers with the perfect lending partner capable of fulfilling their needs and vice versa. If you’re looking for the right lending source for an upcoming project or initiative, call or contact us today to get started.