One of the worst things you can tell somebody considering a home purchase is that mortgage rates are rising. This phrase can bring a grown man to cry. But, does the recent rise in rates mean they will continue to soar? Well, don't cry just yet.
According to the Bankrate website, the average 30-year fixed-rate mortgage is 3.88%, up 41 basis points over the last week. That's an additional $23.15 per $100,000 compared to last week. So, if you are financing a $400,000 home, you will be paying around a $90 higher monthly payment compared to if you locked in on a rate this time last week.
So, why is this happening? Is it a result of Trump winning the election?
This quick increase is, according to experts, a result of investors who are banking on Trump's proposed infrastructure spending and slashing of taxes. Which will increase prices, as well as inflation. This thinking has essentially lowered the demand for bonds and sent Treasury yields to the highest level they have been this year. Since mortgage rates tend to move in the same direction as 10-year Treasury yields, they too have spiked since Trump's triumph.
Experts do advise people that rates were going up, regardless of Trump's win; but, they do anticipate a rise during the Federal Reserve's upcoming meetings. According to Greg McBride, chief financial analyst for Bankrate, "Rates tend to move very sharply in short periods of time and very little in prolonged periods of time. It's not something I think continues." Today's rate is still amazingly low compared to rates 8 years ago. Even if it rises slightly. You will still be getting a good rate. Make sure to find a trustworthy mortgage lender who can update you on daily rate increases as well.
In the meantime, if you need to start that homesearch...or, just need advice. Feel free to contact me to discuss your options.
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Real Estate Specialist
First United Realty