Mortgage rates have been at an all time low for some years now. Why is that? When will it Change? How will it affect you? These are questions you should be asking yourself.
So how are rates set? The US has a Federal Reserve system set up to control the money supply and foster full employment. Think of them as the Banks Banker. There are 12 Reserve Banks with 7 Board of Governors who make policy. When Federal Banks sell US security notes they take money out of the overall supply and rates go up because there is less money to lend. When they buy them back they put money back into the supply and there is more money to lend out so rates go down. They also set interest rate that they loan money to commercial banks, like Chase and Wells Fargo. If their rates are low then banks can charge less and customers can afford to borrow more, expand business, hire and the economy grows. Today Fed rates are close to zero. Everything the Fed does is only a stimulus to get the economy moving and as soon as it picks up rates change again. It isn’t healthy to keep rates low for too long. All saving accounts 401’s retirement accounts are making nothing currently.
The Feds want to increase rates and have been signaling that message for some time now, Janet Yellen, Chairwoman for the Federal Reserve in her last statement this past week indicated that if the job rate keeps increasing and the economy gets stronger you can expect rates to begin a gradual climb upward by September.
So how does that effect you? Well if you have money in the bank you will make more, but if you want a mortgage you will have to pay more or maybe no longer qualify. Looking for a raise at your job, well your company will have less to go around because their money is going out in higher interest payments.
Less Pay and higher interest rates won’t help the housing market and if you add CFPB (Consumer Financial Protection Bureau) the picture gets worse. The CFPB was created by the Dodd Frank Act and is hell bent on punishing banks for their lending practices. Good ,bad, slight or severe the lawsuits keep comm’n, Wells Fargo $24 million, Bank of America $727 million, Ocwen $2 billion, Chase $309 million even Pay Pal got hit for $25 million. What does this mean to you? It will cost more and take longer to get a loan. Banks are paying up rather than fighting long drawn out costly suits. The cost of doing business will be picked up by the consumer YOU.
Quick note here, it is my experience that traditional banks that lend mortgage money will slow the process, delay or even kill a real estate deal. Use a Mortgage Broker to get your funding. If you need help call me 480-266-4578.
With interest rates on the rise, tighter regulations by the government, wages stalled and a flat economy with a 1.8% growth, if you are looking to Buy or Sell your window is NOW
Call me today if you have any questions and request a free Brochure on Buying or Selling 480-266-4578