Mortgage rates are determined by inflation rates in an economy. If inflation rates are high, mortgage rates are likely to be high if inflation rates are low, then mortgage rates are likely to be low. The economic status of the nation has been slowed and point blank flat, which has affected the Federal Funds by two percent rate.
In a recent Federal Open Market Committee (FOMC) meeting, they voted to maintain a stable Feds Fund Rate exactly where it stands already without making any changes at 0.000 percent. Though the numbers may appear unattractive, it is the wish of investors to keep the Federal Funds Rate at 0, depending on how the economic development grows or declines. Also, considering the slow growth of the housing market, it is unlikely to raise the rates.
As we may be aware of the drop in jobs throughout the nation over a few years and high gas prices, it is indicative of inflation to take place. We have seen a huge change as that began to pick up slowly by the increase of over 5 million jobs and moderately lower gas prices. This has affected the rate of inflation, which has been stabilized at about 1 percent; hence, the most appropriate rate for inflation will be at 2% for a healthier economic development.
Furthermore, by the inflation rates staying lower, then mortgage rates are also going to be low. As a result, it is important for Homeowners and non-home owners to tap into the housing market now. What’s the better chance than this time when mortgage rates are low? Who wouldn’t want to take advantage now?
The mortgage rates are at its lowest in the last two years. As a result, if you apply for a mortgage, you will likely fall into the 3% range with low APRs, and you will be able to refinance your already lower rates if you choose to. Consider that 30-year interest rates are as low as 4% within the past six months. These lower rates keep wandering momentarily after the recent Fed’s April 2015 meeting.
However, depending on the shift in economic growth eventually, it will continue to affect and determine mortgage rates. If new information is collected on economic growth or depreciation, then we will have to prepare for new information concerning mortgage rates. Therefore, in the meantime, it is imperative for homeowners to engage in refinancing and attempting to purchase homes to even re-sell or renovate in order to rent out.
Why do I say purchase homes and re-sell or renovate? I say that because, you will profit more if you bought the home at a lower rate, then add a few funds to renovate and then rent out or re-sell. It is the time to seek out this opportunity considering the lower mortgage rates in this period.
According to the QE3, in September 2012, Federal Reserve intended to buy about $85 billion in bonds. The idea was to influence an increase in demand for long-term bonds, which will then affect prices to fall. This means a lower mortgage rates through banks and mortgage brokers for anyone who may be interested. QE3 then became a success yet the Fed still walked out of the program, but we are still experiencing more drops in interest rates. Hence, this is the time for homeowners to shine and invest in the lower mortgage rates of all-time.