Mortgage rates, where will they land?

What year have mortgage rates rose at the fastest pace within the last 50 years……….. hello 2018 how are you?  From January 1st, 2018 to the week ending at may 24th rates have reached 4.66% only to drop to 4.56% this week.   This is the highest mortgage rates have been since April 2011 and about 70 basis points above the 3.95 percent rate seen one year ago. During the same period, median home prices in California have also risen by roughly 10 percent, though many areas of the state have seen much higher appreciation.

Still, even with the recent hikes, historical perspective suggests that mortgage rates are still very favorable. Figure 1 illustrates 30-year, fixed-rate mortgage trends going back to 1971 and emphasizes the continual five-decade decline in mortgage rates. The smaller figure zooms in data to the most recent decade and also illustrates the federal funds rate set by the Fed, which impacts short-term interest rates and indirectly mortgage rates.

What does this mean of the average home buyer?  There is no crystal ball but economists feel in the short term, through the end of 2018, 30-year fixed rate mortgages are still expected to reach no more than 4.7 percent.  Increases are forecasted and expected in 2019 and 2020.  In conclusion, yes interest rates are no longer at that mouthwatering number of 3.7 percent we saw a couple years ago, but if you look at this subject though your historical glasses you will quickly determine we are still in a very good spot.  As these rates continue to increase we will see a direct effect on our Petaluma Real Estate market and the surrounding markets.  So if you were on the fence about buying and you want as much purchase power as possible with your search give me a call today!  

Thanks for Reading,

Mike Ward | Petaluma Realtor