Amidst a strong economy and housing market, long-term mortgage rates in the United States inched upward this week, and as Seattle Times reports, the increase in the cost of borrowing comes “just as more of the millennial generation is entering the real estate market.” According to a release from Freddie Mac earlier this week, “the average rate on 30-year fixed-rate mortgages rose to 4.40 percent, a slight gain from 4.38 percent last week.”
The average is now higher than its been since April 2014 and marks the “seventh straight weekly increase” of mortgage rates. As the Times notes, mortgage rates “closely track the yield on 10-year U.S. Treasury notes, which have climbed to 2.92 percent from 2.46 percent at the start of the year.” Interest is rising in part in response “to greater government debt levels and expectations of higher inflation.”
Moving in to 2018, the general consensus was that the Federal Reserve would begin normalizing long term rates. Now, we're almost two months into the new year and all signs indicate an increase in inflation and a very strong economy for 2018, as the Federal Reserve projected. This confirms their schedule of 2-3 rate increases for 2018. Rates have slowly risen this year from record lows to approaching 5%, which is still historically low. I believe that rates will continue to increase, but at a much slower, measured pace for the remainder of the year, we may even see a pull-back in the coming months. The Seattle housing market continues to lead the nation in 2018, and steadily rising interest rates should not have an adverse impact to property market value.
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