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Volatile Interest Rates!
February 9, 2017


As you may be aware, interest rates have experienced a fairly sharp increase over the last two months. After holding steady near all-time lows throughout 2016, interest rates have risen on average slightly over one-half one percent during this time to approximately 4.20% for a 30-year fixed rate loan. Most economists were caught off guard by the sharp increase. It is due to at least three major factors. First, the unexpected outcome in the presidential election has led investors to invest their money in stocks rather than bonds. Second, in December the Federal Reserve announced it will likely be raising short-term interest rates three times in 2017 due to positive economic indicators and inflationary pressure. Relatedly, the Federal Reserve's actions have caused the price of 10-year treasury yields to rise significantly attracting investors since they are also more secure than mortgage bonds.
In light of the Federal Reserve's actions and unknown economic impacts of the presidential transition, it is predicted long-term interest rates will be in the range of 4.25% to 4.50% this year with a consistent rise to approximately 4.70% during 2018. This means if you are looking to purchase a home, it is probably better to act earlier this year.
Please keep in mind however that when you compare interest rates historically over time current rates are still relatively low and will remain so, at least in the near-term. Thirty-five years ago in January 1982 you had to pay thousands of dollars just to get the average interest rate of 17.48% for a 30-year fixed rate loan!
-Juha Tuominen, Branch Manager & "Five Star Mortgage Professional"
Juha@guardianpdx.com/ 503-997-7521
Guardian Residential Lending


