Whether you are in the market to purchase a new home or refinance your existing home, interest rates are higher now then where they were at the beginning of the year.
30 year fixed rates are generally running over 4%. If you are refinancing and pulling cash out, you’ll be in the range closer to the mid to upper 4% range.
Experts are saying that the top cause for the increase in rates is inflation. The Federal Reserve is expected to increase their short-term interest rates which increases costs for lenders who then pass that cost on to borrowers in the form of higher rates. For the consumer, it affects everything from interest on credit cards, car loans, and even mortgages. It does, however, have a positive impact on rates on high-yield savings accounts.
The purpose of raising interest rates is to make borrowing more expensive so that consumers and businesses borrow less. This could also have a secondary impact on supply chain issues. By consumers and businesses reducing the number of products that they purchase it’s more likely to help alleviate supply chain issues therefore bringing prices back in check.
Unfortunately, things may get worse before getting better for the average consumer. Rising gas prices as well as food prices are hitting low-income workers and retirees the hardest. But the Fed’s goal is to slowly raise rates so that the effect on the economy is gradual and the long-term effect will be reducing the rate of inflation which will be a welcome relief for all consumers and businesses.
Please feel free to reach out to me or your RE/MAX Associated Realtor for more information.