Mortgage Rates on the Rise in Q4 2016
Last month’s rates for 30-year fixed mortgages closed at 3.64% and have held steady at or below 3.5% for nearly half of 2016. Despite these relatively stable low rates, lenders have not seen an increase in applications or refinances. Some surmise that homebuyers are waiting for rates to drop even lower. Analysts, however, predict a slow but steady rise in rates for the remainder of the year.
Last year, industry experts expected that rates would rise in 2016. Instead, they have inched down, even reaching a low not matched since August 2012. Several factors, including the recent exit of Great Britain from the European Union, falling oil prices, sluggish U.S. GDP and slow economic recovery have had a tremendous effect. Yet, analysts believe that the low rates are not here to stay for much longer.
Some anticipate a gradual increase in rates for the remainder of 2016, perhaps as high as 4.6%. More conservatively, some forecast no more than a half a percent rise. The slow rise may be due to the uncertainty that this year’s presidential election is causing in the market. However, other positive economic factors may be enough to overcome the uncertainty. For example, the unemployment rate has been slowly but surely falling and wages are increasing. Combined with a fair amount of inflation, rates are expected to rise for the balance of 2016 and into 2017.