If you’re thinking about buying a home, it’s important to be aware of the Federal Reserve’s recent and upcoming rate changes. Interest rates have been historically low for several years now, but as the economy strengthens, you can expect to see rates steadily increase. Before you start shopping around for rates and apply for a mortgage loan, here’s what you need to know about current market trends:
The Fed announces its third rate hike this year
Since April 2008, the Fed has kept interest rates low. As a result, homebuyers have enjoyed mortgage rates in the low single digits for nearly a decade. The American economy has been steadily on the rise, and as confidence grows, so do interest rates. This Fed cycle has seen eight rate hikes, and the most recent increase to benchmark rates was announced in late September. If you’re currently paying down a credit card or considering applying for a mortgage, you can expect a rate bump of approximately .25% to 2.25%. This change was decided by a unanimous vote, indicating that the economy is on track with the 2% inflation target.
Trends to look out for in the future
Since we’ve already seen several rate increases this year, homebuyers should anticipate this trend to continue into 2019. Jeremy Collett, the executive director of capital markets at Guaranteed Rate, predicts we’ll see rates top out around 5.25 to 5.50% before trends begin to change.
What homebuyers should consider
If you’re ready to buy a home, it’s probably best to kickstart the process and lock in your rate before they rise again. Just a few weeks ago, the average interest rate on a 30-year fixed-rate mortgage was 4.88%. After the Fed’s announcement, the average rate for the same contract is up to 4.97%. If you’re interested in moving through the application process as quickly as possible, consider working with a lender who offers convenient and secure online tools. New technology such as automated asset verification, secure file sharing, and FlashClose will help you reach closing day more quickly, and you may also benefit from a locked in rate before the next hike.
The Federal Reserve is expected to make several changes throughout the coming months, so it’s helpful to be aware of current market trends and predictions. If you’d like to apply for a mortgage loan or you have questions regarding the process, I can help.
By Michaela Phillips, Guaranteed Rate Inc. Michaela is the Vice President of Mortgage Lending at Guaranteed Rate, Inc. Contact Michaela at 303.579.5517, e-mail firstname.lastname@example.org or visit michaelaphillips.com. NMLS: 312874.