30 Year Mortgage Rates Back Under 4.00 Percent this Week
The relentless rise in mortgage rates has paused this week as average 30 year mortgage rates fell. Since Trump was elected President almost a month ago, 30 year mortgage rates have moved higher from just under 3.50 percent to a high of 4.11. This is one of the largest monthly increases in mortgage rates since the run-up in early 2013.
We don't expect the downturn in rates to continue. The Federal Reserve is expected to raise the fed funds rate by 25 basis point this month. Next year forecasts were for the Fed to increase the rate once. There is also now talk that the Fed might increase the rate more than once in 2017.
A higher fed funds rate will put upward pressure on loan rates. Long-term mortgage rates are not directly tied to the fed funds rate but both rates usually move in tandem. U.S. Treasury yields usually also move in the same direction as mortgage rates and the fed funds rate.
During times of economic expansion, the Fed funds rate is usually increased. When the fed funds rate is increased, mortgage rates and Treasury yields also increase.
During economic downturns and recessions, the fed lowers the fed funds rate. Long-term Treasury yields and mortgage rates also move lower when the economy is in the dumps.
The economy is on of of the longest expansion periods ever and recent economic news point to higher mortgage rates in 2017. Keep in mind, rates are moving higher but historically speaking, are still low. If you go back to the height of the recession back in 2008, average 30 year mortgage rates were around 6.50 percent, 2.5 percent higher than the current average of 3.99 percent.
You can find a list of current mortgage rates from lenders in your state by searching for mortgage rates today.
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