There have been so many recent messages about interest rates and what they are expected to do, I wanted to get the inside scoop from a professional that I trust. James Venney, currently working with EverBank, has been a friend of mine, literally since elementary school. He has been in lending for many years and is most reliable. It was rumored that interest rates were expected to rise, first in March and then in June. There was then an article in the Wall Street Journal back in April titled “Fed Shies Away From June Rate Hike”. So what’s going on?! Here’s what James has to say . . .
In the current interest rate environment there is “far more upside risk than downside potential”. What that means is that global economic factors are aligned for mortgage rates to be higher going forward so the bias is towards locking rates at application as opposed to floating and hoping for lower rates. While it is almost universally accepted that the Fed will raise the Fed Funds rate later this year the Fed does not in fact control mortgage interest rates. That being said the same factors that would motivate the Fed to increase the Fed Funds rate have an impact on mortgage rates and therefore you can make the assumption that as the Fed increases the Fed Funds rate, mortgage rates will move up as well. While rates remain near their historic lows home buyers need to be aware that mortgage rates change daily and that their interest rate lock is an important part of the home buying process. For the savvy home buyer there are a variety of interest rate lock options that can prove useful to help them manage this portion of their home purchase.
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