Higher Mortgage Rates? - Nothing Certain Yet!

For the past couple of years, much of the press commentary on mortgage rates has been centered around when they will finally start to steadily climb away from the incredibly low rates that have unquestionably played a major role in creating the extremely robust homes market we are currently seeing.

Indeed it has been an unusually lively fall market, doubtless informed by one of the defining trends in real estate during 2015 - buyers rushing to lock in low home loan rates while they still can.

It's natural, therefore, that attention of both sellers and buyers seems consistently focused on when, as is inevitable, rates will start to steadily rise away from around or below a 4% average for a 30 year mortgage, as one example.

Some press comments these past few days have tended to suggest that the home loan rate rise has already begun, with 30 year rate averages at their highest level since August. However, it's not the first time we've seen this happen, then rates start to fall again.

The key reason behind the recent increases is that many investors and commentators are again predicting that the Federal Reserve will raise interest rates at its meeting in December. This is backed up by comments from within the Fed that the end of the year may well be the time when the economy has finally shown enough recovery to make this important step.

Whereas the rate rise is being reported as almost a certainty in some quarters, it's useful to remember that we were in very much the same situation in September, when that month's Fed meeting was widely expected to yield a rate rise. It didn't happen. As we have seen so many times in recent years, something arrives to upset market stability, be it unfavorable economic news at home or the ever changing international situation, or a mixture of both.

With over a full month to go until the Fed meets on December 15th and 16th, much could still happen at home and abroad to change current predictions.

All this being said, rates have to go up at some stage and there does appear to be a growing willingness within the Fed to make this happen sooner rather than later. Therefore if you are embarked on a home search, it makes a great deal of sense to step up your efforts in the hope of getting an offer accepted on the home you're interested in and locking in a low rate ahead of December 15th/16th. If you're a seller, then you should certainly put any thoughts of withdrawing from the market until after the holidays out of your mind, as right now could be the very best time to sell, with buyers energized by a heightened sense of urgency.

Even if we do see an interest rate rise next month, it's very likely that any resulting mortgage rate rises will be very gradual and, crucially, a Fed interest rate rise decision should be seen as a ringing endorsement of the health of the economy, steadily recovering from the years of recession. More prosperity means that more people can afford to buy homes for the first time or to upgrade. That's the kind of news we've all been hoping for.

If you would like to take immediate advantage of the current conditions, please don't hesitate to call us right away.

Dominic Nicoli