This is due to the last two months of 2016 seeing rates spring up by 0.75% - the highest in two years. In a low-rate market, rapid increases are commonly followed by a drop following effective Fed regulations. —
In 2016, from November through December, the mortgage rates leaped to 75 basis points (0.75%), causing $200,000-houses to cost $90 more per month. The experts' consensus, however, is that this was the last seriously steep jump for home buyers in 2017. The overarching predictions point to a steady downward decline in rates throughout most of the coming year.
30 & 15-Year Fixed Rate Predictions for February 2017
Currently, the mortgagor looking for a fixed 30-year deal can find low rates currently hovering around 4.25% - nearly half as much as it used to be fifty years ago - still more, the current rate on 30-year fixed VA loans is around 3.88%. With the rates said to be somewhere between 4.00% and 4.25% for February, prospective homeowners do have reasons to rest easy and able to afford that dream home. 15-year mortgage rates are said to lie somewhere between 3.46% and 3.26%.
Jessica Lautz, the managing director of the National Association of Realtors in Washington D.C., stated that 2017 highly anticipates millennials - people born between the early 80's and late 90's - to buy their first homes. This is based on the fact that, in 2016, prospects under the age of 35 saw the largest concentration of down payments - 17% in contrast to all other age groups.
As long as one's student debts have been paid off, and have little to no parental obligations, the housing market will likely undergo an upsurge due to the millennials' involvement.
The January 31st Federal Reserve Meeting
One thing every home buyer should be looking out for is the Federal Reserve meeting which will take place by the end of this month. The meeting will commence for committee members to determine the current monetary policies and alter them if need be. One thing that's highly unlikely is a decision to drive rates further up so soon after the last hiccup, but it's possible. If anything should be taken anything away from the meeting, it's seeing through the rhetoric like a laser since that's exactly what will decide the short-term changes that have yet to come.
30 & 15-Year Adjustable Rate Mortgages
If buying a new home is more important to than usual, home buyers should consider going for an adjustable rate mortgage (ARM). As of yet ARMs are hovering at around 10 basis points (0.10%) lower than the fixed-rate option depending on where one looks.
One of ARMs' strong suits is the initial period after closing on a mortgage with a lender. Referred to as "the adjustment period", this length of time which changes from one loan term to the next keeps rates fixed until the adjustment period passes. Although homeowners are often weary of mortgages that change their rates, it can save a fortune if utilized smartly. Refinancing near the end of the adjustment period to a fixed-rate mortgage, for example, will keep a homeowner feeling secure about unchanging monthly payments especially after exploiting the adjustment period in this way.
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