Mortgage Interest Rates 2016




We've been warned for months now that interest rates will be on the rise for 2016. Yet, we've had one interest rate increase by the Federal Reserve dating back to last December. Since then, the economy has been rather confusing, and we've heard everything from raising rates again this spring to the prospect of simply avoiding another recession. The global economy has had an impact on decision makers here in the states who have been patiently watching Chinese market's slow bounce back and closely anticipating the decisions of European policy makers and global investors.  Basically, the fed is parked in nuetral on a flat service with the motor running. 


According to Freddie Mac, the average 30-year fixed mortage was as low as 3.62 dating back to January 1st. This is an incredible opportunity still for future homeowners and second home buyers, and there's no certainty as to how long it will actually last. Read the latest opinions of some of the most renowned and reputable economists in the country. It's very inconsistent and ranges from several rate hikes this year to rate decreases before the end of the year. 


One mortgage rate indicator to follow is the 10-year treasury bond. The bond posted its largest weekly decline in the past couple months after Federal Reserve chairwoman Janet Yellen gave a little doom and gloom perspective about the global markets. The 10-year declined 10.8 basis points in one week. One basis point is equal to one-hundredth of a percentage point.


Loretta Mester is a voting member of the Fed and said that she is concerned about the volatility if rates are not raised, stating that if rates are not modestly increased over time there may have to be a more "agressive" approach some time down the road. 


So, the Federal Reserve's policy-making committee voted not to raise its benchmark rate last month during its committee meeting, and they will meet again next quarter to evaluate and discuss the global economy again before voting on and making another decision. Once projected at a 1 percent increase for 2016, the rate is now more likely to be closer to a half of a percent at the most by the end of the year. Time will tell. I would expect a rate increase some time after the committee meets again next quarter, especially if the American economy continues to defy global economies.