Over the past several years the economy has improved. The stock market recently reached an all time high, investments have risen, and the unemployment rate has dropped.
Now that the economy has improved, interest rates are starting a slow climb to pre-2008 levels. Recently, the Federal Reserve increased the interest rates by a quarter of a percent, and they have signaled that they expect to increase the federal interest rate two more times before the end of the year.
What the Interest Rate Increase Means for Home Buyers
Lenders set their rates semi-independently from the Federal Reserve rate. But they are related. Interest rates are based on dozens of different calculations, including risk assessments, investment potential, treasury notes, and more. It also has to do with the rate at which banks and lenders can borrow money from the Fed, which in turn affects risk (among other things).
The calculation itself is fairly complex, but generally the federal interest rate does mean a higher interest rate for mortgages.
However, for current home buyers, there is good news.
This federal interest rate hike has been in the works for a long time, and lenders, bankers, and the housing market already adjusted to this expected hike long ago. That means that current mortgage rates are unlikely to change.
In a way, the housing market already adjusted for this perceived rate hike months ago, knowing that it was going to be coming around March of 2017. For home buyers that have been looking for a few months, and plan to keep looking for a few months more, you are unlikely to see your rate change at all, and if it does change, the amount it changes will be negligible.
Contact Open Mortgage Today for Current Rates
Those that are in the market for a home have no need to panic. There is unlikely to be any cost difference for now, and if interest rates do change, that change is expected to be very minor.
For more information about current mortgage interest rates, or to find out your eligibility, contact Open Mortgage today!