Mortgage rates weren’t too good for the past few years, but things are starting to look brighter as they were able to break the winning streak a few days ago.
Following the below 4 percent rate for 7 weeks, the mortgage rates were able to increase basis points to as much as 4.03 percent the previous week, as revealed by the data released by Freddie Mac.
The mortgage rate was under pressure recently, after the central bank of Europe announced their tighter monetary policy. They expected that the easy money stance will be continuing for some time, yet they just announced that some changes are seen on the horizon.
This then put some pressure on the mortgage rates in the United States since it signaled a lower demand for the bonds all over the world. The United States mortgage rates are being driven by the value of a kind of bond, the mortgage backed securities.
But still, the rates close to 4 percent can be regarded as very good. On top of that, the latest developments from the United States Central Banks further helps to bring the rates down.
This means that now is a great time to start looking for home mortgage rate.
Federal Chair Janet Yellen Got Something to Do with the Rates
The Fed has an amazing power over today’s markets. Most average consumers are at a consensus in believing that the United States’ central bank, the Federal Reserve, has a direct control on consumer mortgage rates. This is merely a myth. But, it is true that the markets can swing depending on the words the group says.
This was proven a week ago. Federal Chair Janet Yellen said that the group wouldn’t need to raise the Federal Funds Rate further in order to balance the monetary policy. Simply put, it means that the group feels like there is no need to be concerned about inflation, and the economy doesn’t heat up that much. There’s no need for the Fed to jack up rates as far or as fast as it assumed it would have to last this year.
As a response, there have been improvements in mortgage rates..
Two reasons explain this event. First, markets are not after super growth in the economy of the United States. It only takes the Fed at its word that the economic growth must stay tame. The second reason is that rates don’t have to fight the rising tide of the higher rates as triggered by the Fed. Upward revisions of Federal Funds Rate have the tendency of trickling down to most kinds of consumer interest rates. Simply put, a Fed soft on the interest rates is great for shoppers of mortgage rate.
Lenders have been polled Freddie Mac to find the weekly average rate for over 45 years. This is among the longest running rate surveys in the United States. Due to the longevity, this is also among the best ways for tracking historical rate movement. However, it is a really great way for determining your interest rate.