There are still a multitude of clients that are extremely worried about rising interest rates. Stop worrying! I want to ease the pressure buyers are putting on themselves to lock up a home ASAP in order to avoid a bad decision or over-paying for a home due to the fear of rising rates.
If you remember my blog from January (Fearless 2017 Predictions: South Bay Real Estate), you read my prediction that mortgage rates will barely rise. The Fed will continue to be the biggest purchaser of residential mortgage-backed securities, thus controlling interest rate moves. As long as “the clip” in their FOMC meeting notes stays the same, then we are safe.
The most current example proving my point is The Fed raised rates on March 15th for only the third time in a decade. Rates should be rising, right? Not according to CNBC. Just two weeks after the quarter point rate increase, Diana Olick reported on March 29th in her title article “Mortgage Applications Stay Flay Even as Rates Drop to Lowest in Three Weeks.”
According to the article, rates are even lower today than the week before The Fed raised rates. Hmm…
Now yes, many market experts were predicting a rate hike so perhaps bankers had already priced their rates properly in expectation of a rate hike. What I believe is The Fed has been very deliberate in preparing the market for a rising Fed Funds rate, as a result, current rates will not be shocked by a Hawkish Fed. Furthermore, as long as The Fed continues to reinvest principal payments into mortgage-backed securities, they effetely are controlling the residential interest rate market to keep housing stable.
So for now, stop worrying about rising rates and don’t rush the process of purchasing a home until the time is right for you.