Higher Rents and Higher Interest Cost


There has been a ton of media attention this week on rising interest rates for mortgages.

 

According to Bloomberg:

“Mortgage rates for 30-year U.S. loans surged to the highest level in almost two years, increasing borrowing costs at a time when the housing market is strengthening and prices are jumping.

The average rate for a 30-year fixed mortgage rose to 4.46 percent from 3.93 percent, the biggest one-week increase since 1987, McLean, Virginia-based Freddie Mac said in a statement. The rate was the highest since July 2011 and above 4 percent for the first time since March 2012. The average 15-year rate climbed to 3.5 percent from 3.04 percent.”

 

Two Primary points I want to make:

 

1) Borrowing at 4.46% and getting a double-digit cash-flow yield, and rising home prices to boot is still an amazing investment

case shiller data

2. While borrowing cost are increasing, so is rent rates.

housing rents

 

 

Declining Home Ownership Rates; Driving increase in rent revenue

Declining Home Ownership Rates; Driving increase in rent revenue