Where Are Mortgage Interest Rates Headed?

2017 will bring a lot of changes, but will it impact the real estate market?

Yes, it’s finally happened. The Federal Reserve officially raised rates once again earlier this month. While not a surprise, the rise in rates was due in Home prices on the rise in Santa Claritapart, according to Federal Reserve Chairperson Janet Yellen, economic growth which has picked up since the middle of the year.

This means that the interest rate at which banks borrow money from the Federal Bank have raised, which doesn’t always translate to an immediate rise in consumer mortgage rates. That being said, mortgage rates have been rising slightly on their own since the national elections in November, a month before the announced rise by the Fed.

Don’t panic! Rates are still low!

While rates have gone up in the past month and a half from the upper 3% range, they are still holding at below 4 and a half percent, which still gives home buyers plenty of purchasing power when choosing a home. 

What other choices do I have if I want a lower rate?

Buyers do have options to lower their mortgage rate. Of course, this depends largely on the quality of their credit and what they may qualify for. 15 year fixed rate mortgages may come with a larger monthly loan payment, but you’ll pay off the principal much more quickly and home buyers usually qualify for a lower rate than a conventional 30 year mortgage.

Also, qualified buyers may find that an FHA mortgage will have a lower rate, although there are certain restrictions. Contact me for more information. 

A 5/1 fixed ARM (Adjustable Rate Mortgage) gives buyers the flexibility of a mortgage rate that starts off with a considerably lower interest rate and payment. This option works best for buyers who do not plan on remaining in their home for a long period of time, or plan on refinancing before the 5 year term has expired.

You have plenty of home mortgage options. Let me help you find the one that’s best for you.

Contact me for a no obligation consultation.

 

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