Predictions regarding mortgage rates this year are proving to be difficult to follow. Depending on which blog you read or which economist you listen to, rates could either continue to drop or start to rise back up. However, with so much going on this year regarding the economy, it might be easier to make an opinion of your own when it comes to calculating what way rates will be leaning. See below some factors that are currently affecting rates today.
With new administration in the White House, economists are unsure how home buyers will react to new policy changes. New policy changes have the power to either raise mortgage rates or lower them. A recent change concerning the suspension of the fee reduction for Federal Housing Administration (FHA) loans has now been in effect since the end of last month. This cut was announced on January 9th and would’ve made FHA mortgages less expensive. Requiring a lower down payment than Fannie Mae and Freddie Mac, FHA-backed loans are especially popular with people who are purchasing their first home. Had this fee reduction still been in effect, 0.25 percentage points of the total amount borrowed would be cut. Other policy changes will certainly be in the future. However, it’s too early to know which ones are expected to come about and how they will affect the industry.
The semi-annual monetary policy testimony
Surprisingly, Federal Reserve Chair Janet Yellen hinted at a possible rate hike soon. During the semiannual monetary policy testimony on Tuesday, Yellen said to Congress that waiting too long would be “unwise”. She specified that the rate hike will be based on how well the economy is doing. More specifically, it’ll be determined by how well employment and inflation are developing. It seems that policy changes will not be a direct effect for the expected rate hike. Yellen is also confident that the economy is on the rise and has “continued to make progress.”
The mortgage industry is an industry that is known for being unpredictable. At any point during the day, rates could climb to historical highs or plummet to groundbreaking lows. While changeability in any industry can be exciting, it’s beneficial to always keep a close eye on what’s going on in the market and what is affecting rates. Economists will vocalize their opinions even more as the Federal Reserve’s next policy meeting in March inches closer. If you are interested in viewing today’s rates before they adjust any more, click here!