Last week, following the Fed’s hike in the rates they charge banks, you might expect a matching rise in mortgage rates for St. Cloud home buyers and refi applicants. If the experts are right, that’s far from a done deal.
The Washington Post headline said it all:
“Mortgage rates move slightly higher but could be headed back down again.”
Mortgage News Daily reported the same: a slight nudge upward, then back down:
“By holding flat, rates remain very close to the best levels seen in more than 8 months.”
The consensus was all but unanimous, with even Freddie Mac predicting that “mortgage rates are likely to follow” Treasury yields—that is, downward.
When the Fed raises the rates banks must pay, it’s only logical to expect the move to echo through the money markets, finally reaching home loan lenders. After all, they must raise rates to maintain the same profit level. But following the Fed announcement, investors drove Treasury rates sharply lower. The reason for the market’s seemingly reverse reaction wasn’t due to the Fed’s move: rather, it was because of “a surprisingly weak” Consumer Price Index report (which the Fed had chosen to ignore). In other words, investors believed the CPI instead of the Fed.
The likely effect on St. Cloud home buyers and sellers remains very good news. With St. Cloud mortgage rates holding at the “best levels seen in more than 8 months,” more families’ budgets allow moves to bigger and better homes. And for those who read the Fed rate news and feared it might be too late to take advantage of historically low interest rates, the Mortgage News Daily offered a further prediction about mortgage rates that even “stand a shot at going lower this summer.”
St. Cloud mortgage rates do rise and fall daily—and knowing for certain where they are headed is famously impossible. As Bloomberg.com noted by the end of the week, “it’s been an especially rough six months” for those charged with predicting trends. What needs no crystal ball to establish is that it now seems likely that this year’s spring-summer busy season will continue to produce real estate bargains that would have seemed almost inconceivable in earlier inflation-ridden decades.
With both sellers and buyers seeing St. Cloud mortgage rates that translate into more house for lower monthly payments, it remains prime time to check out the market—and to give me a call!
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