Mortgage market becoming more turbulent
Posted on Thursday, December 1, 2016 at 4:14:43 PM
The past month or so has been a strange one in the mortgage market. The turbulence being experienced now comes as no surprise, as analysts and economists have been arguing that rates would begin to rise a bit more rapidly going into the end of the year, and then return to normal levels in January and beyond. Rates have been incredibly low for years now, which gave the residential real estate market a necessary and positive push in the right direction.
However, the Federal Reserve, as well as banking entities, cannot maintain historic low interest rates forever, as it would be detrimental to the economy in the long run. Homeowners who are still thinking about refinancing their mortgages, or buyers looking to purchase a house soon, should keep their eyes on the lending market to ensure they are making the right decisions.
Activity falling quickly
MarketWatch recently reported that the month of December got off to a relatively poor start in the mortgage arena, with activity related to financing and refinancing falling quickly thanks to rapidly rising interest rates. According to the news provider, 30-year fixed mortgages had an average interest rate of 4.08 percent on Dec. 1, which is another 0.05 percent increase from the week prior. That was not all, though, as a 3.34 percent average interest rate was recorded for 15-year fixed mortgages, which is an even bigger rise than many expected.
The end of November and beginning of this month saw the average interest rate on 30-year fixed rate mortgages reach their highest levels seen in 2016, and all signs point to continued increases in the coming months. The news source also pointed out that separate data compiled by the Mortgage Bankers Association revealed a 16 percent decrease in refinancing applications, which is among the clearest signs that high rates are having an immediate and massive impact on the marketplace.
"With mortgage rates at the highest we've seen this year, borrowers are now backpedaling on refinance opportunities," Sean Becketti, chief economist at Freddie Mac, told MarketWatch.
At the end of the day, interest rates are growing for all the right reasons, as the American economy is in strong form going into 2017. However, those individuals who are looking to purchase a new home or refinance their existing mortgage should get moving as soon as possible, as rates are only going to continue to increase.
If you are looking to get approved for the best possible residential refinancing program, always consider working with your local bank to discuss all of your options and which will be suited to your unique situation. From understanding the comprehensive view of how the mortgage will impact finances, to simply getting more personalized support than is often available elsewhere, community banks tend to provide a more comfortable experience to their clientele. Again, mortgage interest rates are rising fast and are expected to continue doing so for a while - get moving on your application today!