Industry experts have been shocked to see mortgage rates dropping even though the Fed increase the baseline interest rate.
The incredible plunge in mortgage rates is blowing away industry experts who expected them to skyrocket after the Federal Reserve boosted the baseline rate late last year, as we reported recently — but that may not be done falling yet.
If you’re looking to buy a home, now is a very good time, but you might be able to wait a little bit longer. Rates have already dipped to 3.62 percent for a 30-year-fixed rate mortgage, which is near a record and far below the 4.01 percent rate that it was at last December — a big surprise to economists who expect rates to jump with the Fed boosting the interest rate.
The volatility of the stock market may be the primary cause for the strange behavior of mortgage rates. For that reason, this run could last for at least a little while longer. The global market conditions are getting ugly, but it’s also the reason why we have low gas prices and low mortgage rates. Morgage rates are closely tied to 10-year Treasury bonds, and since investors flock to these bonds in times of volatility like we have now, they’re helping keep those mortgage rates low, according to a Washington Post report. So if volatility continues — and with the condition of the global market right now, that’s not a huge assumption — those rates will continue to stay at historic lows.
In addition, the Fed probably won’t raise its baseline interest rate again at its next meeting in March, and it may not do it again this year, which would relieve pressure on mortgage rates.
So if you haven’t bought a house yet, there may be still time for you to do it before rates go back up again.