Every Cloud …


Every Cloud …

We know an editor who says her favorite word is “context.” She is a good editor.

In light of this and in acknowledgement of Mark Friedman’s article on the drop-off in home sales in some of Arkansas’ most populous counties, we’d like to point out two things.

This is an Opinion

We'd also like to hear yours. Leave a comment below, tweet to us at @ArkBusiness or
email us.

The first is that this current high mortgage rate environment is really, historically speaking, not that high. The average 30-year fixed-rate mortgage stood at 7% in January 2001, falling to 4.9% by the end of that decade, which saw the Great Recession. Going back a decade further, the rate was 9.6% in January 1991. That still remained far below the truly terrifying heights achieved on Oct. 16, 1981, when the average 30-year fixed-rate mortgage hit 18.5%.

But as Mervin Jebaraj, the director of the Center for Business & Economic Research at the University of Arkansas, noted, that’s little comfort to those seeking a mortgage now.

Our second observation is that a world of high interest rates, while a bad one for those with debt or seeking a loan, can be a good one for savers with cash. Investors flooded into the stock market when they saw the minuscule returns of once-popular financial instruments like certificates of deposit. Now, high-yield savings accounts and CDs and Treasury bills are much more appealing.

The key to navigating a changing financial landscape is to first recognize that it is changing and then to adapt.