Unless you have lived in a cave all year, you know that the Federal Reserve is about to raise interest rates, which might affect your pocketbook as you prepare to apply for a mortgage loan or a refinance.
However, how it has played out isn’t what experts predicted. Here are three things you need to know about the current state of mortgage interest rates:
1. They’ve Stayed Low This Summer
Despite predictions since the last quarter of 2014 that interest rates will rise anytime, interest rates have stayed about the same for several months.
Bankrate notes that the current interest rate for a 30-year fixed mortgage is 3.84 percent. That is almost exactly where it was six months ago.
Although there was a minor fluctuation in July, with average interest rates expanding to about 4.2 percent, August and some low sales reports from the National Association of Realtors brought numbers back down.
2. They Could Go Up Anytime
Last year, experts predicted a rise in interest rates this past spring to curb inflation. By the time spring came around, experts predicted that rates would increase in June.
When June came and went, folks at Fannie Mae and Freddie Mac changed their minds to September.
Now, people just aren’t sure when rates will go up. The Fed will only raise interest rates if housing prices are spiraling out of control and applications for loans will not entirely plummet.
You know it will happen, but you don’t know when.
3. Rates Will Climb Gradually
Of course, whenever there’s a rate hike, people sometimes panic.
They choose not to apply for a mortgage refinance because they don’t want to pay a tenth of a percentage point more, or they decide to use it right away because they think they will lose the opportunity otherwise.
The truth is that rates usually don’t rise or drop precipitously.
So even if you miss out on getting a rate under 4 percent, you probably won’t pay 6 percent at the beginning of next year.
This means that you can and should take the time to research and apply for the best mortgage with the right lender for you. You’ll save a lot of hassle in the long run.
When interest rates rise, buyers pay more for their mortgage payments.
However, despite expert predictions that rates would have risen significantly, they remain low.
Although it is likely, that rates will eventually increase from these near-historic lows, it does not mean you have to make a hasty decision about your mortgage needs.
You will still have time if you prepare to buy a home or refinance your mortgage sometime next year.