Interest Rates Rise… So What?

The Federal Reserve raised their benchmark interest rate 0.25% this week.

So what does this mean for real estate?

Some perspective is in order…

First, mortgage rates are not directly tied to the Fed Funds rate. They are, however, closely tied to the 10-year Treasury.

While the Fed was raising their rates this week, mortgage rates actually dipped lower (although slightly).

Mortgage rates today on a 30-year loan are essentially 4.25%.

The long term average for mortage rates, going all the way back to 1970 is 7.5%

For every 1% rise in rates, there is a corresponding 10% impact to the monthly payment.

Mortgage rates have increased about 0.75% since the election.

Most economists expect rates to increase another 0.5% by year-end.

Click HERE to read a great article that goes a little more into depth about what this means for homeowners.

We are watching mortgage rates closely and will continue to keep our customers updated as to where the experts think they are heading. Contact us directly if you have any questions. (970) 460-3033.

Posted on March 17, 2017 at 3:23 pm
Windermere Colorado | Category: Finance | Tagged , , , ,

The Trump Tantrum

interest-rates-gameSince the election interest rates have jumped from 3.77% to 3.95% according to the Mortgage Bankers Association.

“This week’s increase in mortgage rates, being dubbed the ‘Trump Tantrum,’ is the biggest one week increase since the ‘Taper Tantrum’ in June 2013,” said Bankrate’s chief financial analyst Greg McBride.

Economists say the anticipation of Trump’s pledged spending plans and tax cuts have investors anticipating some inflation and a dose of adrenaline to the economy which have caused a great deal of volatility in the market.

A little perspective is in order- rates today are still lower than the 3.97% recorded last year at this time. And, rates today are still essentially half of their long-term average.

Using a $400,000 home as an example with a 20% down payment, this interest rate increase translates to an additional $34 per month.

Many economists believe that we are now seeing the beginning of a long-term rise in interest rates.

source: Inman News

Posted on November 18, 2016 at 11:53 pm
Windermere Colorado | Category: Blog, Colorado Housing, Colorado Real Estate, Finance | Tagged , , , , , , , , , , , , , , , , ,