Mortgage Rates Expected to Rise in 2017 According to Experts
It is hard to determine where mortgage rates will go but according to housing and economy experts, rates will continue to rise throughout 2017. Mortgage rates are determined in the market by a various supply and demand factors that sometimes impossible to assess. These factors include statistics such as home sales and construction, credit availability, oil prices, geopolitical developments and others.
It is impossible to know for sure but broad trends and experts can provide insight into the mortgage market.
According to an interview in Inman, Steve Cook, editor of Real Estate Economy Watch, believes that mortgage rates are on the rise and they’re not going down any time soon, “The day has finally come that people have been talking about for two years when you start seeing a steady rise in interest rates. The kind of rates we were getting earlier this year, down to 3.5 percent — those days are over.
Unfortunately, it’s not an exact science. However, mortgage rates fell further than any expert or analyst had previously foreseen.
The belief that the rates can’t go any higher is a big mistake. According to Inman, these are the reasons why this may be the case, including:
- The unemployment rate at 4.6 percent is historically very low, and this could be a signal of rising wage and price growth in the course of 2017.
- The price of oil has rebounded sharply, rekindling inflation fears.
- The incoming Trump administration may be poised to institute tax cuts and spending increases, which could boost growth, inflation and the budget deficit.
- Regulatory reform could encourage loosening credit standards that boost mortgage demand.
- Policy uncertainty is adding a risk premium to long-dated fixed income assets, especially in mortgages.
The consensus, according to the experts interviewed by Inman, was that the 30-year fixed rate in 2017 will most likely stay in the range of 4-percent to 4.5 percent and possibly even 5 percent by the end of the year.