For the first time in history, mortgage rates are at near historic lows as the U.S. job market is operating at full capacity. Since the decision to buy a home typically involves a steady job and the ability to afford monthly mortgage payments, demand to buy a home is currently at an all-time high.
So far the Fed has increased its benchmark rate three times since the financial crisis as they track economic improvement and attempt to maximize employment and stabilize inflation. If the economy continues to improve, and economic data remains positive, another increase could come as soon as May or June. While consumers with credit card debt may see an immediate increase in interest rates as a result of the Fed’s rate increases, the effect on longer term mortgage loans will be less direct, but still impactful. As RPM’s Julian Hebron explains in an article on Zillow “Even though mortgage bonds represent longer-term rates, these Fed hikes still fuel selling of mortgage bonds, pushing mortgage rates higher.”Read More “3 Tips To Help Home Affordability When Rates Rise”