Real Estate

Mortgage rates coming back down to Earth, for now

30-year-fixed-mortgage-rates-past-six-months-1-20-17

As inauguration day is upon us, for better or for worse, there is one bright bit of news for home buyers and home owners alike: mortgage rates are continuing to fall back down and could dip under 4% if the trend continues. Rates skyrocketed in the wake of uncertainty following he-who-must-not-be-named being elected, however, ever since the calendar turned to 2017 rates have begun to relax and now continue their descent back down to 4.00%. The current average over the past week according to the Federal Reserve Bank of St. Louis has rates at 4.09%.

For home buyers this is obviously great news, but for homeowners who had planned to refinance but could not during the golden age of mortgage rates, now may be a good time to lock in a rate before they climb back up. The Fed is expected to raise interest rates three times during 2017, and those rate hikes should coincide with mortgage rates rising to somewhere in the range of 4.5% to 5.0% by the end of the year.

In a speech on January 18 titled “The goals of monetary policy and how we pursue them,” Federal Reserve Board Chair Janet Yellen spoke candidly on the topic saying:

Now, many of you would love to know exactly when the next rate increase is coming and how high rates will rise. The simple truth is, I can’t tell you because it will depend on how the economy actually evolves over coming months. The economy is vast and vastly complex, and its path can take surprising twists and turns. What I can tell you is what we expect — along with a very large caveat that our interest rate expectations will change as our outlook for the economy changes. That said, as of last month, I and most of my colleagues — the other members of the Fed Board in Washington and the presidents of the 12 regional Federal Reserve Banks — were expecting to increase our federal funds rate target a few times a year until, by the end of 2019, it is close to our estimate of its longer-run neutral rate of 3%.

While rates are currently trending down, it’s only a matter of time before they begin the ascent back up.

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