The Federal Reserve raised their benchmark interest rate 0.25% this week.
Some perspective is in order…
First, mortgage rates are not directly tied to the Fed Funds rate. They are, however, closely tied to the 10-year Treasury.
While the Fed was raising their rates this week, mortgage rates actually dipped lower (although slightly).
Mortgage rates today on a 30-year loan are essentially 4.25%.
The long term average for mortage rates, going all the way back to 1970 is 7.5%
For every 1% rise in rates, there is a corresponding 10% impact to the monthly payment.
Mortgage rates have increased about 0.75% since the election.
Most economists expect rates to increase another 0.5% by year-end.
I am watching mortgage rates closely and will continue to keep my customers updated as to where the experts think they are heading.