Double-digit mortgage interest rates in the next 5 years?

Question

I know nobody has a crystal ball, but given what you know of the past and of economics....what is the likelihood that we'll see...8%, 9%, 10%, 12%, etc...interest rates on mortgages again? Like in the early '80s. What economic factors would have to be in place? Would you say the chances are high or low? What does your gut say?

Answer 1

No the oil bubble (and that is just what is has been) is starting to deflate, the dollar is getting stronger and the economy is still in the positive. Might see 7-8% at max

Answer 2

I would say low....I am not big on economics or anything but common sense just tells me no.  Simply because prices are way higher now than what they used to be.  Having higher interest rates will just slow down the housing market even further and price almost everyone out of the market.  Home prices have more than quadrupled than the 80's....maybe they will get a little higher but I think 18% mortgages are a thing of the past...unless home prices continue to sink and get to their previous levels.  But with construction costs at a all time high I doubt it.

Answer 3

Dishonest in economics is rampant in the US.  I doubt you will see rates rise above 9%.  The Federal Reserve, and Federal Government will just make it harder to get a loan, or introduce new loan product.  (The just introduced a new loan product yesterday (Bank Ameri...) to collaterlize loans.  

However the Federal Gov.  is still playing with real inflation numbers CPI.  As long as people don't catch on to it ==> poeple are dumb.  Rates will remain lower than inflation actually is.

If you really want to see what is comming => www.dollarcollapse.com  The first chapter of the book is online.

Answer 4

I have been in real estate for 30 years.

I don't think we will see 12% again within the next 5 years.  It would take a huge disaster for that to happen.

When we got up to 17% in the 1980's it was because we as a nation just decided that we no longer needed to even try to pay our bills.  Inflation allows you to pay back your debts with cheaper dollars than you borrowed.  That always seemed dishonest to me.  We may get there again, I just think it will take longer than five years to become that dishonest.

I do believe we could see 8% by this time next year.  And 9% would not be outrageous to consider by five years down the road.