In her semi-annual testimony to the Senate Banking Committee, Federal Reserve Chair Janet Yellen expressed uncertainty about the labor and housing markets and indicated that any increase in interest rates would be indicated well in advance of a rate change. Based on Ms. Yellen’s statement, industry analysts predicted that the earliest that the Federal Reserve would increase interest rates would be June. It is important to note that although the interest rate policy implemented by the Federal Reserve is one of the most important factors that determines mortgage rates, it is not the only factor. Mortgage rates are influenced by multiple factors including broader housing, economic and geopolitical conditions.
What it Means for Mortgage Borrowers
The Federal Reserve Chair’s testimony did not have a significant impact on current mortgage rates. Most industry analysts had predicted that June would be the earliest that the Federal Reserve would possibly raise interest rates so Ms. Yellen’s testimony did not come as a surprise to the market. Although mortgage rates have crept up over the past several weeks, they remain relatively low and now continues to be a good time to buy a home or refinance. Ms. Yellen’s testimony did signal that the Federal Reserve is inclined to raise interest rates some time this year, potentially as early as June, which means that mortgage rates are likely to increase over the course of 2015. It is impossible to predict interest rates and the Federal Reserve remains concerned about the relatively unsteady labor and housing markets but it would not surprise the FREEandCLEAR Mortgage Expert to see interest rates increase over the second half of 2015. Now may be a good time to pull the trigger if you are thinking about buying a home or refinancing and use the INTEREST RATES feature on FREEandCLEAR to monitor mortgage rates for lenders in your area.
The FREEandCLEAR Mortgage Expert