The Mortgage Market Takes a Prompt Breather before Revving up

The Mortgage Market Takes a Prompt Breather before Revving up

Soon after the Federal Reserve increased the benchmark for interest rates during the midway of December and after a run-up in mortgage rates, now the country has been witness to a dip in rates during the last of 2016. On 3rd January, the average rate on a 30 year term mortgage loan decreased by a single basis point from 3.96% to 3.95%. But for the last week, the rates on 30 year term mortgages were down by 7 basis points from the average rate of the previous week. Are you someone who is hunting a 30 year mortgage loan in the first week of January, 2017, you should prepare yourself to pay something more than the average rate.

As per reports from the Mortgage News Daily, the best rate for people who are planning to get themselves a home loan is 4.25% but there are quite a number of lenders which offer loans at 4.375% and just a few who offer rates as low as 4.125%. The experts and financial analysts within the mortgage industry are of the opinion that this decline in rate is nothing but a minor shock and they also added that with the New Year, mortgage rates will continue with their as usual hike.

Are mortgage rates likely to march higher in 2017?

The director of research of an eminent mortgage firm, Anna Dunn Tabke recently has quoted that the mortgage rates will most probably move higher throughout 2017 and homebuyers need to wary about the steps they take. After enough of indecision, the Federal Reserve increased the rates on federal funds in the month of December and they will most likely repeat this action of their again in 2017. Hence, this becomes the main driver behind rates right now.

Yet another possible effect is the current performance of the bond market. The prices of fixed income were hit hard during the 4th quarter, especially when Donald Trump was elected as the President and when he started debt funding and gave his promises on reforming the tax system. Yields move up when prices go down and this has a direct impact which we can see when markets get carried away before rectifying. In fact, rate gurus have started recalculating the price estimates for 2017 and all of them predict them to rise like before.

What does Freddie Mac predict on this?

As during the month of October, Freddie Mac anticipated that the 30 year fixed rate mortgages would be at 3.8% in 2017 but this prediction already seems to be outdated and proven wrong. As per Freddie Mac’s own survey of more than 100 lenders, rates even popped to 3.95% soon after the win of President Donald Trump. Brown also suggests that after witnessing the mortgage rates at the 3% levels since 2016, consumers may expect the rates to move up higher, probably between 4% and 4.3%. This shows that not all market analysts believe that the mortgage rates will rise throughout 2017.

The 30 year fixed rate mortgage which increased from 3.75% before the elections during November has again flattened down to 4.03% during 3rd January, 2017 and experts even are of the opinion that it may not move higher as it has already gone up as much as it could. It is indeed tough to believe that the 10 year Treasury rate in the next 6 months can ever reach 2.75%. The Treasury rate can even go down to the 2% level and this implies that mortgage rates aren’t poised to move too higher.

So, if you’re in the mortgage market waiting to strike a deal, you may speak to a local broker to receive an expert view on the rates and how you should act on the deal. 2017 is all set to become too uncertain and hence you need to brace yourselves against any indecision that can boomerang you in the long run.

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