For prospective home buyers who have been eyeing the St. Cloud listings without any particular sense of urgency, last week’s mortgage interest rate news could have added an element of angst. In the up-again/down-again world of consumer finance, even the threat of higher mortgage interest rates acts as a nudge in favor of action. And the lead story in USA Today’s Money section headlined it succinctly:
“Mortgage rates, home sales hit 4-month high.”
The actual rise in mortgage interest rates in itself was scarcely significant enough to spur potential St. Cloud buyers to action. The rise was tiny—just 0.05%. That was still below where rates were even a year ago, when they were near historic lows. Per The Wall Street Journal, “borrowing costs remain low…well below the September 2015 average of 3.89%.”
But that good news for buyers didn’t come without an overhang of apprehension. In fact, the reason for the jump in home sales could well have been mortgage interest rate anxiety. Analysts weren’t shy about pointing to the expectation that the immediate future would probably include higher rates. In other words, a Fed decision. Again.
“The Federal Reserve will likely raise interest rates later this year,” according to CNBC, citing remarks made by New York Fed President William Dudley. The week also found the Fed’s San Francisco counterpart, John Williams, broadly hinting at a hike sooner rather than later, since “it makes sense to get back to a pace of gradual rate increases.”
The specter of higher mortgage interest rates has always been related to home buying activity since the size of homeowners’ monthly payments are so dramatically tied to them. Especially for those who can remember when St. Cloud mortgage interest rates were two or three times those quoted today, the desire to avoid repeating the experience is compelling.
That sense of urgency wouldn’t be dampened by news that the pace of home sales have also quickened. Nobody wants to be too slow to seize a closing opportunity—so last week’s headlines about rising sales and rising mortgage interest rates could easily have been a wake-up call for some.
That’s not to say that any prediction about what the Fed will actually do isn’t an iffy proposition. Although most analysts seem more certain than not that a hike in December is all but baked into the pudding, there were a few naysayers. MarketWatch highlighted economist Lindsey Piegza, who said that although a rate increase was already being priced into the market, “I don’t expect the Fed to actually pull the trigger in December.” The reason: the data continues to support the notion that the Fed needs to remain on the sideline.”
St. Cloud mortgage interest rate watchers would scarcely be surprised if that proves to be the case: we’ve seen it play out the same way for most of the year. But as a reality check for anyone who might be seriously considering a real estate move anytime soon: now is a terrific time to buy from any perspective—historical or financial. Which makes it prime time to give me a call!