US mortgage rates were on the rise over the last week, mostly in response to the tax reform bill that boosted Treasury yields via lower bond prices.
These rates have been quite unstable recently, influenced by not only the potential tax reforms but also Fed monetary policy and investigations into the current administration.
Those who want to buy a home or refinance an existing mortgage may rightfully be uncertain about what exactly the market holds for next year.
Freddie Mac’s latest weekly mortgage report, which was issued a few days ago, said that rates on 30-year fixed-rate mortgages had increased to 3.94 from the previous week’s 3.90. However, this is still significantly lower than the 4.13% of a year ago.
To a certain extent, fears that the US government could be shut down kept rates in check last week. Another factor was the storm that broke out after President Trump recognized Jerusalem as Israel’s capital. All of this put upward pressure on Treasury prices and therefore helped to keep returns – and eventually rates – under control.
Right now, future prospects for lower rates remain very uncertain, but things might become somewhat clearer later today with the publication of the FOMC economic projections. Economic indicators have recently been quite positive, and the prospect of lower taxes on corporate profits is also expected to be positive.
For now, market players have prepared themselves for three rate increases in 2018, with Jerome Powell’s selection as Fed Chair and outlooks for inflation keeping rate increase projections to relatively low levels.
This week, the additional funding that was approved for the government for a two-week period will probably reduce the demand for US Treasuries, which could put further upward pressure on mortgage rates. Friday’s non-farm payroll and wage growth reports will also probably put further upward pressure on these rates.
The general consensus in the market right now is that rates will continue to increase. Under these circumstances, locking in the best available rate is undoubtedly a lower-risk approach than floating in the hope of catching a break.
Use our mortgage calculator to determine how much you can afford to borrow, and do not forget that we offer a mortgage pre-approval facility.
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