The Federal Reserve hiked short-term interest rates Wednesday, in a move largely predicted by economists. So, what does this mean for mortgage rates and buyers?
“That means rates like we’ve seen for most of the past five years are indeed history,” writes Jonathan Smoke, realtor.com®’s chief economist, in his latest column. Rates in the 3 percent range are gone.
“Mortgage rates will move higher before the Fed acts again, so if the Fed carries out its three planned hikes in 2017, we could come close to 5 percent on 30-year conforming rates before the end of next year,” Smoke notes.
How big of an impact could rising rates have in the coming months? A median-priced home would be $978 per month payment at Wednesday’s rate of 4.2 percent (and assuming a 20 percent down payment), realtor.com® notes. Take that rate to 5 percent, the monthly payment jumps up to $1,074, nearly $100 more.
So, if you intend to buy next year and finance the purchase with a mortgage, now is a great time to begin!
Source: “Fed’s Rate Hike Confirms It: Time Is Running Out on Low Mortgage Rates,” realtor.com® (Dec. 15, 2016)