Interest Rates Went Up…But They Didn’t Go Up!

A big deal was made out of the Federal Reserve raising rates last month, so why are they still at historic lows?

It was one of the biggest “hold  your breath” moments in the financial community. They said it was coming all year long. What would happen when it Mortgage applications on the rise in 2015did? Would it change the mortgage and real estate industry as we know it? Are the good times over?

Yes, we’re talking about the Federal Reserve finally following through on a promise they’ve been making for quite some time: The raising of interest rates. Now, when we discuss raising rates from a Federal Reserve standpoint, we’re talking about the rate lenders pay the Federal Bank to borrow money at what would be in laymen’s terms, a “wholesale” rate. For the first time in nearly a decade, the Fed bumped their rates a quarter percent.

So what are interest rates for home buyers today?

As of the date of this article, rates for a 30 year fixed-rate mortgage stand at 3.98 percent*, which is a near record low. If you want an even lower rate, shoot for a 15 year fixed-rate mortgage, which is holding at just 3.15 percent. 

Wait…WHAT?

That’s right. With the rate increase from the Federal Reserve, it turns out that mortgage rates have actually slightly dropped in light of what we thought was going to be a “major impact” on the market. How is this possible?

What we have to remember is that, while the Federal Reserve dictates the rates that lenders pay to borrow money, lenders and the stock market still control where rates may fall…although remember, they do have to make a profit. For example, you won’t see 4 percent interest rates if the Fed were to ever raise them to 5 percent.

Trading is still strong for Mortgage-Backed Securities, and the real estate industry is still doing swift business here in the Santa Clarita Valley (Not to mention the rest of the country). Perhaps its a bit of the old saying, “If it ain’t broke, don’t fix it” when it comes to how much lenders want to charge consumers.

Either way, now is the time to buy!

Contact Team Avalos Real Estate to learn more about how you can take advantage of market conditions to reach all of your real estate goals.

 

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