The latest figures show that the average interest rate for a 30-year fixed-rate mortgage has risen from 3.94 to 4.03 percent. At the same time last year, the rate was 3.95 percent. The climbing rate indicates an evolving trend, so people looking for a home would be wise to complete their transaction as quickly as possible to access the current low-cost mortgages before rates rise even further.
National Association of Realtors chief economist Lawrence Yun said that as Americans expect the Trump presidency to bring economic stimulus on infrastructure, tax cuts, and increased military spending, which all could lead to higher inflation next year.
The rising rates add to the belief that the Federal Reserve will raise the federal fund's rate at their meeting next month. This short-term interest rate will make loans to financial institutions more expensive, with many lenders passing such an increase on to consumers.
Freddie Mac chief economist Sean Becketti suggests that 2017 is likely to see the housing market slowing as higher rates take effect. Though a boom in house sales is likely in the near term, demand is likely to be dampened as the cost of borrowing increases. This, in turn, will soften the growth of prices and slow construction rates of new homes in the New Year.
"I would say the era of extremely super-low interest rates are over, now we are beginning to see steadily higher mortgage rates," Yun said.
This article was provided by our partners at moneytips.com.
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