On Tuesday, Nerdwallet released the average mortgage rates in the country:
The average interest rate on a 30-year fixed-rate mortgage soared 22 basis points to 4.615% APR. The average rate on a 15-year fixed-rate mortgage jumped 18 basis points to 3.791% APR and the average rate on a five-year adjustable-rate mortgage went up 11 basis points to 3.492% APR, according to rates provided to NerdWallet by Zillow. The 30-year fixed-rate mortgage is 22 basis points higher than one week ago and 135 basis points higher than one year ago. A basis point is one one-hundredth of one percent. Rates are expressed as an annual percentage rate, or APR.
Last Wednesday, the Federal Reserve announced a new target for the federal funds rate of 0.25%. Why is this big news? Well, the rate had been close to zero since the onset of the COVID-19 Pandemic in March of 2020. The federal funds rate is the rate that banks charge each other to borrow money, so an increase in target makes it more expensive to borrow money, making loans like mortgages have higher interest rates. The main goal for the target rise is to stunt inflation.
If you’re close to buying a new home, try to lock in a rate as soon as possible. Don’t rush just because of interest rates if you’re on the fence about buying. If history has taught us anything, we see a decrease in home prices whenever rates go up, and buyers slow down.
Questions? Reach out to one of our advisors for a chat!
Link to full Nerdwallet article: https://www.nerdwallet.com/article/mortgages/mortgage-interest-rates-forecast