Mortgage rates started inching up last week and have been volatile this week. Today, the Federal Reserve is expected to announce a hike to the federal funds rate, and it may be a larger increase than what was initially expected. Mortgage rates are elevated as a result.
Rates have increased dramatically this year in response to inflation and the Fed’s attempts to tame it. The central bank first raised its benchmark rate by 0.25% in March, followed by a 0.5% increase in May. Most experts had been anticipating another 0.5% increase in June. But last week’s Consumer Price Index report showed that inflation increased again in May, leading some to predict that a 0.75% increase may be coming.
While mortgage rates aren’t directly tied to the federal funds rate, they often inch up as a result of Fed rate hikes.
Today’s mortgage rates
Today’s refinance rates
Use our free mortgage calculator to see how today’s mortgage rates will affect your monthly and long-term payments.
By plugging in different term lengths and interest rates, you’ll see how your monthly payment could change.
Are mortgage rates going up?
Mortgage rates started ticking up from historic lows in the second half of 2021, and may continue to increase throughout 2022.
In the last 12 months, the Consumer Price Index rose by 8.6%. The Federal Reserve has been working to get inflation under control, and plans to increase the federal funds target rate five more times this year, following increases in March and May.
Though not directly tied to the federal funds rate, mortgage rates are often pushed up as a result of Fed rate hikes. As the central bank continues to tighten monetary policy to lower inflation, it’s likely that mortgage rates will remain elevated.
What do high rates mean for the housing market?
When mortgage rates go up, home shoppers’ buying power decreases, as more of their anticipated housing budget has to go toward paying interest. If rates get high enough, buyers can get priced out of the market completely, which cools demand and puts downward pressure on home price growth.
However, that doesn’t mean home prices will fall — in fact, they’re expected to rise even more this year, just at a slower pace than what we’ve seen in the past couple of years.
What is a good mortgage rate?
It can be hard to know if a lender is offering you a good rate, which is why it’s so important to get preapproved with multiple mortgage lenders and compare each offer. Apply for preapproval with at least two or three lenders.
Your rate isn’t the only thing that matters. Be sure to compare both what your monthly costs would be as well as your upfront costs, including any lender fees.
Even though mortgage rates are heavily influenced by economic factors that are out of your control, there are some things you can do to help ensure you get a good rate:
Consider fixed vs. adjustable rates. You may be able to get a lower introductory …read more
Source:: Business Insider