- Mortgage rates have seen a steady increase since the beginning of the year.
- A higher interest rate could mean a higher mortgage payment each month.
Mortgage payments are a large part of home ownership, so it’s best to know what’s going on in the current market regarding home loan interest rates.
Interest rates are impacted by the economy and can directly increase or decrease your monthly mortgage payment. Right now, the economy is doing well and home loan rates are on the rise! A higher interest rate could mean a higher mortgage payment each month.
What’s the Cost of Waiting for Homebuyers?
There are pros and cons to inflation, so what’re your options as a home buyer?
With rates continuing to increase, home buyers will want to jump on the chance at home ownership before the interest rates get any higher.
The good news is that rates are still low! In the graph below, you can see rates were at 8% in 1999, which was the last time the economy was doing well. Recently the 30-year conventional mortgage rate has been around 5%. This 3% difference in interest rates would cost a home buyer with a $250,000 mortgage an extra $443 PER MONTH on their monthly payment.
Use our mortgage calculator to see how interest rates can affect your home purchase.
Mortgage Rate Forecast for June 2018
Mortgage rates have seen a steady increase since the beginning of the year. They’re the highest they’ve been since April of 2014, and predictions indicate the trend will continue.
While many housing agencies and mortgage groups predicted rate increases in 2018, they didn’t see it coming so quickly. Groups like Kiplinger, Fannie Mae and Freddie Mac, National Association of Home Builders and National Association of Realtors all thought the 2018 increase would result in 4.5% or lower rates by the end of the year.
We are just reaching the middle of 2018 and rates have surpassed predictions!
Why Are Rates Going Up?
We’re seeing an increase in mortgage rates because of steady economic growth.
Since the Great Recession in 2008, unemployment has decreased from 10% to 4.1% and wages are increasing. A low unemployment rate and getting paid more is good news, but along with that usually comes inflation.
Everything from the cost of eggs to car prices increase in order for companies to keep hiring and paying higher wages.
With added stimulus from the Trump tax plan, its predicted mortgage rates will continue to increase throughout the year.
Don’t you want to buy now to take advantage of the best rates and prices?
Rates Are Still Low
While potential home buyers are beginning to feel pressure to buy now, don’t completely panic. Rates are still at an all-time low even since the 2008 recession when mortgage interest rates were still at 6.5%.
Something to keep in mind is that interest rates today are as much as 3% lower than they were in 1999 when the economy was last doing well.
Looking back to 1981 the economy was also considered to be in good standing. Rates varied from 15-18% and people thought they were getting a great deal.
Different Home Loan Rates
It’s important to know that ALL rates vary and depend upon individual home buyer qualifications, credit, area, loan type, etc. Talk to a mortgage consultant here about your options.
The rate increases mentioned have been about conventional loan rates, yet there are other home loan options that can help home buyers who are nervous about the outlook for the year.
FHA, USDA, and VA loan types are there for those who may not otherwise qualify for a conventional mortgage.
An FHA loan is a mortgage that allows for a purchase of a primary residence with a low down payment and is insured by the Federal Housing Administration. FHA loans help families become home owners by lowering the cost of financing and the down payment barrier to buying. Learn more about the opportunities with these loans here.
A USDA home loan is backed by the United States Department of Agriculture. It’s aimed at helping home buyers purchase homes in rural developments across the US.
Learn more about this loan here.
There are also refinance options with this loan. Learn more about refinancing with a USDA loan here.
Exclusive to veterans, the Veteran’s Administration (VA) allows the borrower to finance up to 100% of the purchase price (if the value is supported) of their primary home and allows the seller to pay up to 4% seller concessions.
VA home loans are a powerful tool for purchasing or refinancing home mortgages and generally offer low-interest rates, easier qualification standards, less strict credit and income standards and no prepayment penalties. Learn more about VA home loan eligibility here.
Even though the market seems to show rising interest rates, don’t forget that current interest rates are still historically low! The benefits of buying now can save you hundreds of dollars per month.
https://themortgagereports.com/32667/mortgage-rates-forecast-fha-va-usda-conventional https://www.reuters.com/article/us-usa-fed-powell/feds-powell-nods-to-stronger-economy-backs-gradual-rate-hike-path-idUSKCN1GB1QU https://www.washingtonpost.com/news/where-we-live/wp/2018/02/15/mortgage-rates-climb-to-their-highest-levels-in-nearly-four-years/?utm_term=.4f17838dc8d2