Mortgages

Mortgage Rates Climbed High Post Election

Mortgage Rates Climbed High Post Election

Mortgage Rates Climbed High Post Election

Since the 2016 presidential election, the average mortgage rate of a 30-year mortgage plan rises to 3.94% last recorded by 3.57%. In the past 14 days, the rate increased 40 basis points (BPS).

However, when compared to this time last year rates, 2016 rates are still pretty low. For 30-year mortgage plan, the last year rate was recorded by 3.97%. Let’s assume; a home loan amounts $250,000 with a 20% down-payment. The monthly mortgage payment would be $948, $42 higher than it would have been last week.

The vice president of HSH.com, Mr. Keith Gumbinger said, “The faster the inflation, prospects for growth will also be faster. Markets are getting ready for what is likely to introduce in the months ahead.”

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On the day of an election, the closing rate of the 10-year Treasury note was 1.85%. A week later, it closed at 2.24%. Treasury notes are the benchmark for mortgages, car loans and various types of loans. Hence, increase in yields makes borrowing more difficult and expensive than it was.

Tight inventory levels have boost up the prices of housing market throughout the US. However, low-interest rates pushed up many buyers to pay higher prices.

Gumbinger noted, “If you look back the previous rate of mortgages you will only see them as bad as the start of 2016.”

The mortgage rates rose up only 10%, but an increase has set up the trend of higher rates this year. According to The Mortgage Bankers Association (MBA), a drop of 9.2% has been noticed in the mortgage applications, since last week.

The federal reserve, to be met in December is also expected to raise the federal fund interest rate, which is the short-term rate used to lend money to financial institutions.

While an increase is a palpable anticipation, Gumbinger added, “He will be concentrating on the US central bank’s language. If the message is an acceptable one, no reaction will take place from markets, but if it sounds a hawkish or an insulting tone, then markets reposition for future increase in interest rates will be seen by all of us.

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