Where are interests rates heading?

To understand where interest rates are heading in 2017 we need to quickly look back at 2016. According to Freddie Mac mortgage rates started the year off at 3.97%, hit their lowest point of 3.41% after the BREXIT on 7-7-2016, and ended the year at their highest levels with a rate of 4.32%. That is a swing just shy of 1.00% in only one year. By comparison, 2015 saw a swing of only .50% from 3.59% to 4.09%.

Could we see rates increase even more in 2017? Our Magic 8 Ball says “you may rely on it.” The question then becomes “how much higher?”

Mortgage rates, which are not directly tied to the Prime Rate, have already “priced in” recent events including the main driving force behind the Federal Reserve’s December 2016 decision to increase the Prime Rate .25%: the anticipation of aggressive fiscal policy leading to inflation. Today rates are sitting at 4.20% and a reasonable estimate for 2017 mortgage rates is that they may actually rebound back under 4.0% during the few first months of 2017. However, we aren’t sure this will last and the common consensus is that they should eventually go up and we hope they won’t end up higher than 4.75%.

In respect to the Prime Rate, if you have a home equity line of credit (HELOC) your rate already went up .25% after the Fed’s December 14, 2016 increase. Yesterday the Fed indicated they will increase rates another .75% in 2017.

Stay tuned for more updates and don’t hesitate to act now if you’ve been putting off refinancing for any reason. We are only a phone call or an email away if you would like to see what your options are before rates go up further.