The Federal Reserve held it’s January meeting this week and announced afterwards that it will be adjusting its policies to offset inflation. So what does that mean to you? If you were thinking about refinancing, you may want to do it sooner than later!
The Fed announced that “it will soon be appropriate to raise the target range for the federal funds rate” and also that it is going to reduce the monthly purchases of mortgage backed securities. The Fed had been buying mortgage backed securities to keep interest rates low. None of these announcements were a surprise to investors as most expected these comments from the Fed. One surprise was the comments from the Fed Chairman regarding how big an increase. He wouldn’t commit to a number but was asked if it could be as much as a .50 point increase, his response was no comment to a number but inflation is worse than it was in 2015. Most expected a .25 point but we won’t know that number until it happens in March.
So what does that mean to you if you want to refinance? Interest rates are bouncing around day to day, sometimes even with multiple changes in a day. The odds that they increase are greater than any chance they decrease. If you want to refinance, now is the time! All indications are that 2022 will be a year of increasing interest rates. Interest rates were around 3.25% the first week of January, now they are closer to 4% or more.
Also for those that have mortgage preapprovals from last fall, you will want to talk to your loan officer and see if you still qualify for the same amount. With interest rates increasing, it will affect how much you can buy.
Leslie Vanderwerf, NMLS ID#335509, Cross Country Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
