Only two links this week so I am going to just blab a little here. The 10 year treasury hit 3% for the first time in a long time this week. And as of this writing the market hasn’t totally collapsed. Maybe rate normalization may actually happen and we all will survive it. There have been many questions and predictions about what will happen as rates go up and we addressed some of them back in February. There is a lot no one knows. What we do know is bond rates, mortgage rates and your savings account rates will go up. What we don’t know is how the markets will react long term. Below are just a few and my guesses at the answers. Run from anyone telling you they know the answers.
If cash is more attractive, will investors put less in the market? Some will but not enough to significantly impact the stock market.
Will real estate suffer because of higher rates? No. I have said before, nothing really keeps people from buying homes if they qualify. If the bank will lend it, people will take it. The interest rate is just a part of the deal.
Will the economy suffer? Not because of rates. This is VERY debatable but I am very much a believer in cycles. You can’t isolate one thing in the economy. Rates are part of the “economy”. We could see a slow down in the coming years but I don’t think we will be able to definitively point to rising rates for it. Instead, maybe the cycle is causing rates to go up.