Still-Low Mortgage Rate Rises: Impact on Coronado Real Estate

          Right now, mortgage rates for Coronado Real Estate, and San Diego (as in the rest of the nation) are higher than they’ve been for 15 months—a trend that’s likely to continue, but will it affect real estate prices in Coronado? We have to wonder about the impact higher Coronado mortgage rates will have on  Coronado area home sales in the coming year. First, some perspective. If mortgage rates do increase in 2014, it’s no ‘done deal’ that home buyers will be put off—nor that a wave of foreclosures in Coronado will follow. The reason? By past standards, interest rates will still be low, even at the 5½% predicted by the N.A.R. Any hike in mortgage interest rates are coming off the historical 3.52% set in the spring of last year. Consider: most of us were paying mortgage rates between 7 – 8% throughout the 1990’s! 5½% looks like a fire sale compared with those. Factor Two: surprisingly, a projected rise in interest rates is not predicted to dampen the enthusiasm for acquiring property for sale in Coronado. The Mortgage Bankers Association predicts that home sales will increase nationally by 10% in 2014. I have no doubt that some Coronado first time homebuyers could be waylaid by rising interest rates—after all, a 1% increase in mortgage rates equates to approximately a 10% rise in monthly payments. But overall, buyers who can meet the current lending standards should still be able to afford to own. Given the cost of the renting alternative, they may decide they can’t afford to pass up the right house at the right price. It is...