As most of you are by now aware, the mortgage rates have risen substantially since the presidential election, and even more so in the last couple of weeks.
Though interest rates are affected by a number of things, bond buying on the secondary market is one of the biggest factors that affects mortgage interest rates. The more bonds that are purchased, the lower the interest rates are, and the fewer that are purchased, the higher the rates are.
As we’ve seen consumer confidence rising and unemployment rates declining, we’ve also seen inflation steadily increasing. These are all signs of a stabilizing economy; as the economy stabilizes, we can expect interest rates to climb. Some experts say that we should expect the average interest rate to reach 5% or more by the end of 2018.
On the flip side, alongside these changes, we should as see our investments going up as well—so these changes aren’t necessarily a bad thing. If the rates were to have stayed as low as they have for a while now, it might have been a signal that we were heading to a mini-depression, which wouldn’t be a good thing for anybody.
If you have any questions regarding interest rates or how they’re calculated, please don’t hesitate to reach out to us.