For both buyers and those seeking cash, mortgage rates are important.
- Mortgage rates have gone up and expected to continue to rise over the next year.
- As the economy improves, the Federal Reserve (Fed) raises short-term rates from their unusually low level to get back to a “normal” rate of interest.
- The Fed just raised those rates a quarter percent at their June meeting. The Fed chairman said he expected these rates to go up another 1% over the next year or so.
- When Fed rates go up, so do Home Equity Lines of Credit. If you have one of these, you might think about moving it to a fixed-rate loan.
- Longer term, 30-yr mortgage rates have gone up about one-half percent since the start of the year. The rate stands at about about 4.6% (for many loans), but is still historically low.
- For reference, in 2008, these rates were in the 6% range. So getting a rate below 5% for a loan you can afford is still a good deal.
- If the economy keeps strong, expect rates for 30-yr mortgages to be in the mid-5% range next year.
- For homebuyers there are many traditional and new loan programs that can help you afford the home of your own.
- And for homeowners, taking cash out of your home is often the cheapest financing for home improvement or paying off higher-interest debt. It is a good time to lock in low rates.
I’d be happy to work out the best approach for either a purchase or refinance. A pre-qualification takes just a few minutes. As always, there is no obligation or sales pitch. Just give me a call or send an email.