You may have noticed interest rates increased following the presidential election. The Mortgage Banker Association (“MBA”) recently predicted a gradual rise in mortgage rates throughout 2017. Their latest forecast for 30-year mortgage rates was issued in September of 2016 which predicted 2017 increases as follows:
- Quarter 1 2017: 3.9%
- Quarter 2 2017: 4.1%
- Quarter 3 2017: 4.3%
- Quarter 4 2017: 4.4%
The same prediction of gradual rising interest rates was made at the end of last year. This never happened and interest rates for a 30-year home mortgage declined since the end of 2016. Despite last year’s predictions, I feel it is safe to say interest rates will gradually increase. Rates have been at historic lows for years and at some point they will rise. Most economist are expecting two to three Federal Rate hikes between now and the end of 2017. The Feds continue to be the biggest buyers of mortgage-backed securities in the market. If the Feds slow down on these purchases, it may result in an increase in rates. There are many factors that control fluctuations in mortgage rates. Many existing factors indicate a rise in rates (i.e., lower unemployment, inflation, higher minimum wages, global market changes, etc.).
What does all this mean? Most so-called “experts” think the rates will slightly increase over the next year. You should lock in your rate now if you are serious about selling, buying or refinancing. I especially feel strong about acting now if you are looking to buy in San Diego. The prices continue to rise and inventory is still moderately low. Even a small increase of half a percent to a full percent will cost a homeowner thousands of dollars. Locking in makes sense since the rates are still historically low.
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