The Federal Reserve met this week and as expected left interest rates alone. No one expected them to move rates this month, everyone was more concerned with the comments after the meeting. The Fed doesn’t set mortgage interest rates but rates can move with the comments from the Fed. The federal funds rate does affect home equity lines and other short term debt.
Based on the comments from the Fed, most investors are now expecting the first rate drop to be in May. Originally the discussion was that the first drop would be March but inflation numbers aren’t quite where the Fed wants to see them yet. Also the employment numbers have been better than expected. This week we will see the report for the January numbers and that could affect interest rates. Inflation numbers have been dropping faster than many had expected and the job market is holding up well. The Fed will look at dropping rates later this spring to keep the federal funds rate from becoming overly restrictive.
Mortgage rates have been dropping since this fall. This has helped those looking to buy a home, the payment difference on a $500,000 mortgage is about $300/month less from the October peak. That can make a huge difference in qualifying for a home. Many expect interest rates to keep falling this year. The latest estimate I heard was mid 5% range by the end of the year. No one knows for sure and there are many factors that can affect mortgage rates.
We expect the spring market to be similar to last year although we are hoping for more inventory! As interest rates come down, expect more buyers to be looking at homes. If you are thinking about buying this year, you may want to start looking now! There is still competition if the home is priced right but you can also still get some deals out there! It can be easier to get seller paid closing costs if need be. Connect with a realtor and loan officer so you know what you can do!
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
