So far in 2017, mortgage rates have remained flat or lowered. While most market analysts predicted higher interest rates by now, some surprise factors have kept the numbers low. This is great news for home buyers, but the second half of the year can bring about a rise in mortgage rates.
On one hand, the economy is strong, and unemployment is low. Low unemployment means more buyers in the market, which almost inevitably leads to higher interest rates.
On the other hand, failed healthcare legislation in early 2017 actually drove mortgage rates lower. Why would that be? Any federal legislation that introduces a level of uncertainty about other major financial commitments (and healthcare is a big one) will drive those rates down. With the new healthcare bill having passed in the House, it will be interesting to see which direction mortgage rates go, depending on the outcome of the Senate vote on the same bill.
For instance, one of Trump’s key campaign promises included lower taxes. While we haven’t yet seen a tax plan proposed, the direction it takes will have an impact on mortgage rates for the last half of 2017. If Trump and the GOP successfully pass new tax legislation, that will lead to more consumer spending, which leads to inflation, which leads to…you guessed it…higher mortgage rates.
The Federal Reserve meets quarterly, and mortgage rates are on their agenda. Keep an eye on the outcomes of those meetings if you’re looking to purchase a home or to put yours on the market. Even political events overseas can make a difference in the Fed’s interest rate decisions.
Today’s lower rates mean faster service and responsive lenders competing to get your business. Now might be the time to make that move, recognizing all the potential political and economic events on the horizon.