Interest rates have been on the radar lately due to the most recent outcome of the election. Well today is the day, with a hike on Wednesday December 14th, with predictions of another 3 more in 2017. Are in house lender Ephraim Schwartz with O’dette Mortgage Group sent out an email today with an outline of the details-
“Janet Yellen announced a .25% hike to the Fed Funds rate this morning. Mortgage bonds/rates reacted negatively, which will move mortgage rates higher, so we have LOCKED all of our clients ahead of an anticipated rate sheet re-price for the worse. Any clients you have in escrow that have not yet locked their rate, should contact their lender immediately to lock.
Janet Yellen is still answering press questions, but here are a few bullet points stemming from her monetary policy statement.
- Fed Funds Rate: Fed Funds Rate increased by .25%, to .75%.
- Prime Rate: Prime Rate is by definition 3% above the Fed Funds rate, and is now 3.75%. Every HELOC is tied to Prime.
- Future Fed Rate Hikes: Janet Yellen suggested we can expect 3 more rate hikes in 2017.
- Inflation: Inflation is up. Personal consumption is at 1.5%. Core inflation has risen to 1.75%. Both are below the Fed’s 2% target, but the Fed expects to hit 2% in the next couple years.
- Mortgage Rates Forecast: Increasing inflation points to higher mortgage rates. Today’s Fed meeting suggest the 30 yr fix mortgage rates will continue to creep higher to more “normal” levels.
- Economic Growth: Expecting “moderate economic growth” in next few years, GDP is a hair better, unemployment is slightly lower. All signs of modest improvement.
- Jobs: Job gains of ~180k over the last 3 months, maintaining a solid place since beginning of the year. Unemployment fell to 4.6% in November, lowest level since 2007.
- Consumer sentiment: Relatively positive.
- Business investment: remains soft, despite stabilization in the energy sector.
- Participation: Labor force has been flat, which given underlying downward trend in participation stemming from aging US population, is a relatively positive sign. ” Ephraim Schwartz
If you have any questions about the information listed above, please do not hesitate to contact your local realtor Carmen Carr, at (530) 448-1643