But a decline in fixed rates might be in the offing. The average 15-year fixed mortgage ticked up to 3.25 percent. “Even if the Fed decides to raise short-term interest rates, we don’t expect a significant impact on the housing market”.
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Similarly, it’s also worth remembering that while lower interest payments are always a plus, we shouldn’t expect a big change in borrowing habits after a rate increase, said Whitney Fite, president of Atlanta-based Angel Oak Home Loans.
By leaving the key rate as is, the Fed is maintaining economic growth by preserving the current low cost of credit for consumers and businesses. “We better get that house before they go up too high, ‘” he said.
After much debate, analysis and consternation the Feds (The Board of Governors of the Federal Reserve) decided to hold off on doing anything to the Federal Reserve rate.
The Fed likely won’t announce a rate increase today, says Dick Lee, founder and president of Independent Mortgage in Newton, Massachusetts. Fed members produced their best guesses for when inflation rates will reach 2%.
The Federal Savings Bank reminds prospects that while rates are low, home prices are rising
due to limited supply and high demand. “Borrowers will find hybrid ARM loans more attractive than fixed-rate loans because ARM loans carry lower initial mortgage rates“.
With the job market now considered essentially recovered from the Great Recession, many economists say it’s time to start edging toward normal rates.
Jonathan Smoke, chief economist for realtor.com, goes a step further than Hepp, saying he thinks a rate hike may actually be good for housing. They say the Fed should wait, until later this year or even 2016.
Tennent-Brown ran a mathematical calculation on interest rates, not including the banks’ special rates, which are limited to borrowers who meet certain conditions, such as having 20% equity and multiple products with a bank.
Why is the Fed considering a move now?
Visit the following links for the Regional and National Mortgage Rate Details and Definitions. The mortgages in this week’s survey had an average total of 0.23 discount and origination points. At this price point, an increase in rates would not turn people off from buying a home, but it may slightly lower the price range in which they are looking to buy.
For years, savers have complained about microscopic CD rates.
Future increases may well be more gradual given the challenges the economy faces, McBride said.
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Mortgage rates are not tied directly to the federal funds rate and how they will respond is hard to predict, said Dick Lepre, a senior loan officer with San Francisco’s RPM Mortgage who writes the weekly RateWatch Newsletter.
