Election reflects Interest Rate Changes with the average contract rate on the popular 30-year fixed loan hitting the highest level in more than a year on Friday and shows no sign of turning on its heels. Buyers went from the prospect of 3.5 percent to 4.125 percent in barely a week.
Mortgage rates are still historically low, but crossing over from the 3 percent range to the 4 percent range means more than just a $50-per-month difference in payments. It means some buyers will not qualify for the strict debt-to-income ratios lenders now require. It also means potential buyers are more nervous about taking the plunge at all.
The Federal Reserve is widely expected to raise its lending rate in December. Mortgage rates don’t follow that rate exactly. Instead they loosely follow the yield of the U.S. 10-year Treasury bond. That yield has been moving higher as investors sell out of the bond market and pour into the U.S. stock market. It all trickles down to neighborhood homes.
Lets see what the New Year brings………