For those who have been watching, and anyone who invests in real estate has, mortgage rates have jumped. And that’s raised some hackles with more than a few pundits who write about such matters.Mortgage rates going up? - not so fast How high have rates risen? Well, they’ve shown an increase not seen in more than two decades. 26 years to be exact according to an article posted on CNNMoney’s website a few weeks ago. (1)

 Yikes. That is a big jump, right? Doesn’t Sir Bernanke and his friends at the Fed buy about $85 billion each month in bonds to prop up bond prices, helping to keep mortgage rates low? That program prints money to buy $40 billion of mortgage-backed securities and $45 billion in Treasury securities each month. You read that right. The so-called Quantitative Easing has been in place since in various editions since late 2008 and has spent trillions on the program and it’s still going strong.

But the Fed in June hinted that the program might end sooner rather than later and the mortgage interest rate market got more than a little spooked. “The sky is falling!” people said. But is it really?

Yes, rates jumped to their highest levels in nearly two years according to Freddie Mac (2) and at the fastest clip in 26 years but let’s look a little closer. Rates were around 3.40 percent for a 30 year loan back in April and on July 11 they hit 4.51 percent. That’s more than a full percentage point in less than 90 days and that’s not anything to laugh at.

But 4.51 percent? That’s bad? That’s going to stall the economy and put the housing recovery on the sidelines? I don’t think so. Where were rates in July three years ago? 4.43 percent. Four years ago? 5.71 percent. And let’s go way, way back to 2008 and what do we find? A 30 year fixed rate mortgage at 6.43 percent! (3)

Let’s not get carried away here. Yes, rates rose significantly compared to what they were but they’re still near their historic lows. This is not an interest rate disaster by any stretch. Home prices have stabilized and on a gradual increase and mortgage rates make real estate investing very, very affordable.

There is no “there” there.

  1. July 11, 2013
  2. Freddie Mac’s weekly mortgage survey