BankSouth Mortgage: Interest Rate Updates
Many of you are likely aware of the recent rise in interest rates and may be wondering what’s next and what this means for the 2017 housing market. While only predictions can be made, here is a recap of what we do know:
While these changes may concern those looking to buy and those in the housing industry, it’s important to look at the whole picture.
Over the past 7-8 years, we’ve seen interest rates not only reach historic lows, but stay there rather consistently. As part of the effort to get America out of the most recent recession, the Fed purposely kept interest rates low to help drive economic growth and encourage homeownership. As our economy has strengthened and unemployment rates have significantly improved, the need to keep interest rates down has, in effect, subsided and this rise in rates reflects an effort to get back to equilibrium.
There’s no doubt that these increases will greatly reduce refinance demand, but the jury is still out on how it will affect home purchases. While it’s likely home purchase demand will remain steady, one of the most important effects of rising interest rates is how they will impact affordability, especially in rapidly appreciating markets. Ideally with a stronger economy and opportunities for work, we will see rising incomes and employment to help accommodate for the higher qualification standards that come with higher interest rates.
The good news is that the Fed has clearly communicated that any interest rate increase plans will be gradual. Overall it is still a low interest rate environment and may still be a great time to buy. One of the most important things to do if you’re contemplating home ownership is to consult with an experienced Mortgage Banker. They will serve as a trusted advisor to help you navigate your options and decide what’s best for your situation.
By Derek Walton, SVP Secondary Marketing Manager
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