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IPFS News Link • Economy - Economics USA

Why mortgage rates are NOT going up now, but...

• CNN Money

Look out, mortgage rates are going up!

That's the fear mongering that some are telling homeowners and homebuyers after the Federal Reserve raised interest rates -- a tad -- off their historic lows Wednesday.

But when a realtor or well-meaning relative tells you to buy a house ASAP, remind them that the Fed rate isn't the mortgage rate.

The current rate on a 30-year mortgage is 3.97%. That's incredibly low by historical standards. Most experts don't think mortgages will go much higher than 4% anytime soon.

The early indications are that rates barely budged after the big Fed announcement (and they may even go down).

"I don't think [mortgage rates] are going up," says Ed Yardeni, president and chief investment strategist at Yardeni Research. "Mortgage rates are really tied more to the bond market than the Fed funds rate."

Translation: There probably won't be much difference between buying a home now or next year.

Even if mortgage rates go up to 4.5% this summer, that would only add about $700 a year to the mortgage payments for a $200,000 home.

 

 

Home prices are likely to come down

The other key thing to keep in mind is that as mortgage rates go up, home prices usually come down.


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