Low Mortgage Rates Here to Stay—For Now
While a long-awaited decision in regards to interest rates has finally been announced, it could prove only temporary. Just within the week or so, the Federal Reserve announced interest rates will stay at record lows, at least for now. Basing their decision on unstable financial markets, low inflation and marked by threats from a weak global economy, the Fed still hinted that a rate hike could come later this year.
Most officials sitting on the committee in charge of setting the federal funds rate expect higher rates to come before the start of 2016. A decision could still come as the Fed meets next in October, and then again in December of this year.
If such a rate hike happens it could translate to higher rates when it comes to home loans. For the past seven years the short-term rate has stayed near zero, dropping with the onslaught of the financial crisis. In anticipation of a decision for 2015, though, long-term mortgage rates in the U.S. inched up slightly at the end of last week. Freddie Mac reports that a 30-year fixed-rate mortgage is now 3.91 percent, up from 3.90 the week before. In comparison, a 15-year fixed-rate mortgage grew from 3.10 to 3.11 percent. Â
In addition, five-year, adjustable rate mortgages increased from 2.91 percent to 2.92 and one-year ARMs decreased from 2.63 percent to 2.56. Freddie Mac calculates average mortgage rates each week by surveying lenders across the United States.
As for points, or the extra fees borrowers have to pay to receive the lowest rates, the average fee in regards to a 30-year mortgage held steady at 0.6 point. A 15-year loan point fell to 0.6 from 0.7 point. When it comes to five-year adjustable rate mortgages the fee also held steady, staying at 0.5 point. A one-year ARM fee went down from 0.3 point to 0.2 point.
Many economists believe it’s time for more normal rates now that the job market has mostly bounced back. Others, though, suggest the Fed should wait until late 2015 or even 2016 due to less-than-optimal inflation, confusion in the markets and a slowing in China.
