When Will Current Mortgage Rates Rise?

All things being equal, current mortgage rates will remain low as long as the Federal Reserve allows them to remain low. Even with a variety of other factors used to determine current mortgage rates, there is no greater influence on current mortgage rates than the Federal Reserve. When it comes time to purchase a new home, now might be the best time in history. There’s little room for argument considering the combination of low home values, historically low current mortgage rates, and the federal government’s $8,000 tax credit for first-time homebuyers. The question remains, however: what lies ahead?

The $8,000 first-time homebuyer tax credit is due to expire in just over a month. If you haven’t committed yourself to searching for a home by now, timing is definitely against you. Although, all may not be lost. First-time homebuyers can still act quickly by getting the ball rolling and getting a pre-approval from a mortgage lender. A pre-approval includes the verification of employment, credit history, down payment, etc. When a borrower has this commitment from a mortgage lender, it is as close as a borrower can get to actually having the cash in hand to pay for a home. That said, getting a commitment from a mortgage lender while you are searching for a home may be the only option of closing in time to benefit from the federal tax credit.

In all likelihood, housing values will continue to decline for the foreseeable future. However, current mortgage rates are projected to increase, and potentially, quite dramatically. We know that mortgage rates provide affordable housing, which ultimately increases property transactions, and finally generates stability in the housing market. But when will current mortgage rates rise?

The Federal Reserve has done a good job of letting us know rates will remain low. In fact, it recently announced they have no intention of raising current mortgage rates any time soon. In the midst of economic uncertainty, it is certainly in their best interest to make this widely known. Alternately, when current mortgage rates do begin to rise, the Federal Reserve will undoubtedly keep that to themselves. There will be several warning signs indicating a boost in current mortgage rates, but none more straightforward and clear-cut than the unemployment rate. As the unemployment rate creeps toward 10% nationally, it’s a good sign current mortgage rates will remain low. When the unemployment rate begins to sincerely decline, watch for current mortgage rates to rise, and quite possibly, sharply.