Well, for context, mortgage rates have hovered between 3.5-4.5% for almost a decade. Rates now going over 4.5% is new, but it’s not a HUGE change yet, and still

Well, for context, mortgage rates have hovered between 3.5-4.5% for almost a decade. Rates now going over 4.5% is new, but it’s not a HUGE change yet, and still well below historical norms. The headline is a little sensational. That said, if the trend continues, it will have an impact on the cost of home ownership, the returns to real estate investors, and ultimately property prices. The cost of debt is just another line item in the economics of owning property, and as it goes up, affordability goes down. This is, of course, offset by a more buoyant economy (I.e. more people with jobs able to afford the higher costs) I invest in real estate, and was curious what the rising interest rates would imply for investment property. So I ran some analysis here: https://ramenretirement.com/2018/05/16/interest-rate-impact/ https://ramenretirement.com/2018/05/16/interest-rate-impact/ Rising rates will add cost (assuming you use leverage), which hurts returns (all things being equal). Every situation is unique, but for higher yielding properties in the Midwest, a 0.5% increase in rates would require a 3-5% drop in property value in order to hold investor returns constant. Of course, that’s not what I’m seeing in the market. It’s the opposite in fact. As rates have been rising, property prices have as well. This has the effect of compressing prospective investment returns. Ironically, it’s times like now when it is most dangerous to invest. I think there are still deals worth doing out there, but it’s wise to proceed with caution. Now is not a time for ‘risk on’.