Are mortgage rates going up?
I wanted to keep you posted about yesterday’s Federal Reserve announcement to increase the Fed Funds rate from 0% to 0.25%. 
This is not a direct increase in mortgage rates, but it does have a trickle down effect.
Assuming the Fed raises its rate by a percentage point over the next year, experts expect 30-year mortgage rates to drift from 3.9% to 4.1% during the period.
That would change the monthly cost of a typical $225,000 mortgage by $26…not enough to deter most buyers.
It is important to be aware of changes in the market, so here’s what you need to know.
Top 5 Things To Know
1. First rate hike in nearly 10 years.
Fed’s first rate increase since June 2006. Back then, the economy was hot: unemployment was at 4.4% and the housing bubble was about to burst. The Fed tried to cool it down by raising rates.
2. It’s a good sign for the economy.
It will signal that the U.S. central bank is confident about the strength of the economy and its ability to handle higher borrowing costs. It also shows how far the economy has come since the Great Recession ended in 2009, when unemployment hit 10%. Now it’s at 5%.
3. Interest rates are coming off zero.
The Fed put rates near zero in December 2008 to boost the economy and stimulate the collapsed housing market. Rates haven’t budged since then.
4. The Fed wants to raise rates slowly.
The Fed will likely increase rates from near zero to .25%. That’s a very small move. Even so, the Fed is expected to raise rates at a slow, gradual pace next year.
5. Homebuyers, pay attention.
Mortgage rates won’t skyrocket overnight but they are expected to start climbing. A typical rate on a 30-year mortgage is 3.9%. That’s very low. In 2006, mortgage rates were above 6%, and way back in the 1980s, rates were 10% or higher.
If you have questions about the market, don’t hesitate to give me a call. I’d love to chat with you and help get you to a better place.
ps. For more in-depth information about mortgage loans or refinancing, talk to Sherri Carter at BancorpSouth. Find her at 615.415.9251 or sherri.carter@bxs.com