Where Are Interest Rates Heading for Rest of 2019

One of the most important things to consider when buying a home with financing is the interest rate that you will be charged to borrow the money. The question that currently being asked is “Are Low Interest Rates Here to Stay?” We are currently at a 21-month low in interest rates.

One year ago at this time, the interest rate on a 30-fixed ate mortgage was 4.54%. One year later, we saw that rate drop to 3.82%.  Home buyers and refinance candidates are getting mortgages in the low 4% points when most housing agencies predicted that rates would be near 5% at mid-year 2019. However, lower rates in the future may becoming less likely. There is a higher probability that rates will rise again. All major housing authorities are predicting higher rates. If these agencies are correct, rates will start to climb soon to reach the average predicted year-end rate in the range of 4.38%. That is still a very good rate but it is not as low as what is available now.

The Federal Open Market Committee (FOMC) also commonly known as “the Fed” meets eight times a year but four of those meetings hold special significance.  At these four meetings, the group releases the potential direction of interest rates. In March, the Fed announced that it would not raise rates 2-3 times in 2019 as predicted.  This resulted in lower mortgage rates and generated much refinance activity. Yesterday, the Fed announced that it will leave rates unchanged for the time being which should keep interest rates at current levels.

If you have been sitting on the sidelines, it could very well be a good time to jump in the market either to buy or refinance.  A 0.80% lower rate on a $350K mortgage equates to a savings of $170 per month. Annually, this would translate to a savings of $2,040 and over the life of a 30-year mortgage, a savings of more than $60K.  To a home buyer, this could mean buying a larger or more updated home or one in a more desirable neighborhood. For those interested in refinancing, it provides more leeway in your monthly budget.

We have already seen how experts who create mortgage rate forecasts can get them wrong. If the Fed sees that the economy is doing well, it may raise the federal funds rate at its July 31st or September 18th meeting. This action would cause higher interest rates for mortgages.  The bottom line is that if you are serious about buying a home with financing or refinancing, act now before interest rates start to creep back up.

Should you have any questions or are looking to buy or sell residential real estate in South Florida and not currently working with a Realtor, please call me at (954) 547-9483 or email me at jkenney10f@gmail.com. Thanks

Jay Kenney

 

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