The lull of mortgage rates under four percent in 2016 has officially come to an end. Based on Freddie Mac’s December 8th Primary Mortgage Market Survey, rates on a 30-year, fixed-rate loan reached a two-year high.
The increase, following a six-week pattern, takes that rate up to 4.13 percent from 4.08 percent the previous week.
Other programs reflect this trend. Over the same period, rates for a 15-year, fixed-rate loan rose from 3.34 to 3.36 percent – its highest since October 2014 – and those on an adjustable, five-year mortgage increased from 3.15 percent to 3.17 percent, which hasn’t seen such a level since September 2013.
Comparing these figures to numbers from a year ago, all three programs have experienced significant and sharp upticks. One year ago, a buyer could get a 30-year, fixed-rate mortgage at 3.95 percent, a 15-year one at 3.19 percent and a five-year ARM at 3.03 percent. Yet, when you look at the big picture, the current amounts are still under the average level from 1972 through 2011.
What’s behind the increases? Real estate experts believe several factors are involved. For one, Trump’s upcoming presidency is expected to bring in a new wave of inflation. At the same time, the Federal Open Market Committee (the United States’ central banking policy group) plans to increase its federal rate by a quarter point – the second hike since the Great Recession started. This factor influences long-term treasury bonds.
Along with these variables, Trump’s presidency is predicted to change the real estate market and economy. Experts think these aspects could lead to a rise in home prices and create more demand for the housing market’s already-limited inventory, especially as buyers have yet to back away. To date, these trends have cut down on refinancing.
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