Reversion to the mean…

If you frequent news sites or have a passing curiosity about real estate or investing, it’s hard to miss the hand wringing stories about mortgage interest rates. Phrases like “soaring” or “crashing up” or any kind of alarmism you can think of are the order of the day for financial reporters. 

Maybe it’s because I’ve reached a certain age and have started recognizing cycles and trends from living memory, but none of it fills me with alarm or dread. Twenty years ago, when I was buying my first place, I was thrilled to get a mortgage in the 7% range. The number stuck in my head is 7.25%, but that’s without spending an hour trying to find my original paperwork from way back when.

Mortgage interest rates ranging from 2-3% over the last few years are, frankly, and aberration to what could be considered normal at any time in the last 30 or 40 years. The 2.9% rate I refinanced the current homestead into was a fluky gift of history rather than something I expected to be able to do at any time indefinitely into the future. Even as I was signing the papers, I didn’t expect to ever be able to get a mortgage that cheaply again in my lifetime. 

The problem, it seems to me, is that we collectively have an absolute shit capacity for anything beyond short term memory. Because of that, when conditions revert towards the historic average or swing past that mark in the other direction, there’s a tendency to think the sky is falling. Like most things, the trick is to not buy into the hype. 

Timing, as they say, is everything. We just lived through what could easily be a once in a lifetime interest rate environment. There are a metric shit ton of people who want to tell you exactly what will happen from here. Maybe one of them will get it precisely right.  All I can tell you is interest rates will increase, then they’ll decrease, and then they’ll increase again. If you’re in the market, the most you can ever be expected to do is figure out the math, know your budget, make the best deal you can, and find the best rate available… and maybe try not to get tied up with one of those “exotic” mortgage options that can blow up your life if the most minor thing doesn’t go exactly as planned.

Don’t get me wrong, I’m glad I’m not in the market for house right now, but casting the current environment as the end of the world is just a little bit disingenuous and a whole lot short sighted.

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