MORTGAGE PRICES ARE AT THEIR BEST LEVELS SINCE 2016... TIME TO REFINANCE?
What does a Fed Rate hike mean?
There is not a direct relation to mortgage rates from the Federal Funds rate, it’s more indirect; ultimately it’s the market’s reaction to the news and/or any other factors that affect Mortgage Backed Securities economically. In general, weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result.
For the Feds raising rates, typically the markets know that’s coming and hedge the markets reactions by building in slightly higher pricing. So we don’t see much change after the Feds raise rates and we have at times seen them actually go down some. That said, it’s volatile when they do and don’t know what will happen.
Ultimately, it's not worth stressing over, but in general the Fed increases rate b/c the economy is improving and they do it to curb inflation, etc. So, it does indicate that if that continues, the trend for mortgage rates will be up over time too.
To see how this affects you personally, please give me a call! 303-862-7760 Tenby@ColoradoMortgagePlanner.com
Mortgage interest rates, as reported by Freddie Mac, have increased over the last several weeks. Freddie Mac, along with Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors, is calling for mortgage rates to continue to rise over the next four quarters.
This has caused some purchasers to lament the fact they may no longer be able to get a rate below 4%. However, we must realize that current rates are still at historic lows.
Here is a chart showing the average mortgage interest rate over the last several decades.
Bottom Line
Though you may have missed getting the lowest mortgage rate ever offered, you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago.