Rate Update: Will the Interest Rates Continue to Go Higher?
If you haven’t noticed, interest rates have risen over the past several weeks.
Overall, the rates on both the 30-year fixed-rate mortgage and the 15-year fixed-rate mortgage had been fairly steady since the beginning of last November—hovering between 3.90 percent and 3.99 percent for the 30-year fixed and between 3.25 percent and 3.44 percent for the 15-year fixed—but have risen over 4.0 percent for the 30-year fixed and over 3.5 percent for the 15-year fixed in the last few weeks.
On February 22, the interest rate on a 30-year fixed-rate rose to 4.40 percent, which is 0.62 percentage points higher than 2017’s low point of 3.78 percent last September, according to Freddie Mac's Primary Mortgage Market Survey. Similarly, the interest rate on a 15-year fixed-rate rose to 3.85 percent—0.77 percentage points higher than the low point of 3.08 percent that also came in September of last year. The current rate on the 30-year fixed is the highest rate we’ve seen since April of 2014 and the current rate on the 15-year fixed is the highest we’ve seen since May of 2011—close to seven years ago.
So here are the two big questions: Will this upward trend continue and will this trend lead to long-term higher rates?
It’s difficult to predict if this current trend will lead to higher rates in the long-term, but we may be able to answer the first question by looking at recent comments from the Federal Reserve about future hikes to the federal funds rate, which is loosely tied to mortgage interest rates. According to outgoing Federal Reserve Bank Chair Janet Yellen, the Fed is likely to raise the federal funds rate in the coming year. “The economy is growing at a healthy, solid pace [and] the job market is strong and inflation is low,” Yellen said. “The Federal Reserve has been on a path of gradual rate increases, and if conditions continue as they have been, that process is likely to continue, and as it does, we would expect [mortgage interest] rates to move up.”
Although the Fed’s three rate hikes in 2017 didn’t affect mortgage interest rates to any great degree, any rate hikes going forward may push the interest rates past the tipping point—especially if inflation rises and the economy continues to show improvement as we get deeper into 2018.
As always, keep in mind that interest rates can be unpredictable and there’s often something on the horizon that can affect the rates—one way or another—so to get an expert opinion on the current rate trends, talk to your mortgage professional.
For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988.
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