Recently I provided an overview of what makes mortgage interest rates fluctuate. Today, I want to provide an update of the mortgage industry in a general sense.
In the summer of 2013, the Fed announced that they would begin tapering the purchase of mortgage backed securities (MBS). The practice of buying MBS’s was intended to help keep mortgage rates low. That announcement caused a spike in interest rates from the low 3% to over 4.5%.
At the beginning of 2014, rates on 30 year fixed rate conventional loans continued to remain in the high 3% to the low 4% range. At that time, you would be hard pressed to find anyone who thought rates at the beginning of 2015 would be as low as the year before. Well, that is exactly what happened! During the second full week of January, rates dropped to their lowest point in over a year with 30 year rates hitting the 3.625% mark. Rates have fluctuated between 3.625% and 4% for the past few months. As we begin the month of June, we have seen rates rise the first few days of the month. But what does that mean for the future?
No one can tell for sure what rates will do, but everything I hear and read indicates that interest rates will rise gradually through 2015. We may see rates approaching 4.5% or even higher by the end of the year.
From an historical perspective, rates are lower now than they have been for the last 10 years and are only slightly higher than the lowest point in 30 years, which was near the end of 2012 and the beginning of 2013. It is only reasonable to believe that rates will gradually increase. It is also reasonable to assume that rates may rise to the 5% mark by the end of 2015 or the first half of 2016.
We have been very fortunate to have had such low rates for the past five years. It is a great time to purchase a home and it is a great time to consider refinancing if you haven’t done so since 2010. As the saying goes “There’s no time like the present.”
Every borrower has a unique need, as far as their loan is concerned. If you have any questions or would like more information, please contact our preferred Lender, Keith Harris at Intercoastal Mortgage Company.
The JS Realty Team – not only serving Brambleton, serving all of Northern Virginia.