What to know about the federal mortgage rates
In December, the federal reserve raised interest rates for the fourth time in 2018. Rates rose a quarter of a percent to a range of 2.25 percent to 2.5 percent.
While this raise is not likely to impact those with fixed-rate mortgages or long-term rates, it does impact those with adjustable rate mortgages (ARM’s) or home equity lines of credit (HELOC’s). Likewise, the Fed’s decision to raise rates can have an impact on a range of consumer credit interest rates.
Changing rates can impact homeowners, home buyers, and other consumers in a variety of ways. The following are three things you should know about changing federal mortgage rates:
ARM and HELOC rates are likely to rise
If you have an ARM or a HELOC, plan to see an increase in your monthly payments. Because these types of loans are subject to varying rates, they can be impacted – for better or worse – by rising or falling federal rates. Those with hybrid ARM loans set to adjust within the next year should consider refinancing now to avoid increases to their rates or payments.
Lower rates don’t always mean a better market
Many buyers associate low interest rates with a better market. However, the opposite is often true. At the height of the housing bubble, interest rates peaked between 5.5 and 7 percent; both homeownership and sales fell along with interest rates for the next several years. Instead, most potential buyers list a lack of savings for a down payment rather than interest rates as their primary obstacle to buying a home.
There’s no guarantee where rates will go
8. While experts predict that rates will continue to rise in 2019, there is no guarantee where rates will be by the end of the year. Global economic growth, geopolitical unease, presidential trade policies, and the U.S. economic expansion cycle can all impact – negatively or positively – mortgage rates. Homeowners looking to refinance at the lowest rate possible should consider locking in a rate sooner rather than later.
by Author, Jan. 11, 2019