Will Mortgage Rates Increase in 2017?

The general consensus is that mortgage rates will move higher in 2017 but that hasn't happened yet and the year is almost half over. When Trump surprised everyone and won the election, 10 year bond yields and mortgage rates moved higher. 10 year yields increased from roughly 1.80 percent to 2.60 percent and average 30 year mortgage rates increased from 3.40 percent to 4.00 percent.

Since then, both bond yields and mortgage rates are lower and in fact, both are lower overall in 2017. This wasn't supposed to happen because the Federal Reserve is in tightening mode and has increased rates twice since December 2016.

While the Federal Reserve doesn't set mortgage rates, their rate changes do affect mortgage rates and the housing market. Mortgage rates tend to move in the same direction as 10 year bond yields because the 10 year note serves as a benchmark for mortgages and many forms of credit.

When the fed funds rate is increased, bond yields move higher and mortgage rates also move higher. The same process happens but in the opposite direction when the fed funds rate is lowered.

The Fed is expected to increase the fed funds rate two more times in 2017 and those rate increases will put more upward pressure on bond yields and mortgage rates. Will two more rate hikes actually produce higher mortgage rates?

We believe so. Don't be alarmed though -mortgage rates won't move much higher from current levels. 30 year mortgage rates today are still under 4.00 percent, averaging 3.92 percent.

At the beginning of the year, 30 year mortgage rates were forecast to hit 5.00 percent by the end 2017. We think this is highly unlikely at this point. A more realistic forecast is for 30 year rates to move up to 4.50 percent by the end of the year, which is only 50 basis points higher than today's average rate.



Loan Type
Purchase    Refinance
Location
State/City    Zip Code
Loan Amt Points FICO % Down
  
$
in 23223, All points, 740    Sort by:
Lender
APR
Rate
Cost & Fees
Notes
 
PERIOD_FIXED_30YEARS Mortgage Loan from AimLoan.com
AimLoan.com
https:https://mortgagerates.icanbuy.com/images/lenderslogos/112335.gif
300000
Purchase
3.281%
3.125%
USD
AimLoan.com Logo
NMLS # 2890
State Lic # MC-3098
08/18/2019
at 2.000 pts
30 day lock rate
Est payment: $1,286
Fees in APR: $5,961
Internet direct lender since 1998. View rates & fees, apply/lock online 24/7
 
PERIOD_FIXED_30YEARS Mortgage Loan from AimLoan.com
AimLoan.com
https:https://mortgagerates.icanbuy.com/images/lenderslogos/112335.gif
300000
Purchase
3.353%
3.250%
USD
AimLoan.com Logo
NMLS # 2890
State Lic # MC-3098
08/18/2019
at 1.250 pts
30 day lock rate
Est payment: $1,306
Fees in APR: $3,903
Internet direct lender since 1998. View rates & fees, apply/lock online 24/7
 
PERIOD_FIXED_30YEARS Mortgage Loan from AimLoan.com
AimLoan.com
https:https://mortgagerates.icanbuy.com/images/lenderslogos/112335.gif
300000
Purchase
3.430%
3.375%
USD
AimLoan.com Logo
NMLS # 2890
State Lic # MC-3098
08/18/2019
at 0.750 pts
30 day lock rate
Est payment: $1,327
Fees in APR: $2,085
Internet direct lender since 1998. View rates & fees, apply/lock online 24/7
 
PERIOD_FIXED_30YEARS Mortgage Loan from AimLoan.com
AimLoan.com
https:https://mortgagerates.icanbuy.com/images/lenderslogos/112335.gif
300000
Purchase
3.524%
3.500%
USD
AimLoan.com Logo
NMLS # 2890
State Lic # MC-3098
08/18/2019
at 0.250 pts
30 day lock rate
Est payment: $1,348
Fees in APR: $903
Internet direct lender since 1998. View rates & fees, apply/lock online 24/7
 
PERIOD_FIXED_30YEARS Mortgage Loan from AimLoan.com
AimLoan.com
https:https://mortgagerates.icanbuy.com/images/lenderslogos/112335.gif
300000
Purchase
3.750%
3.750%
USD
AimLoan.com Logo
NMLS # 2890
State Lic # MC-3098
08/18/2019
at 0.000 pts
30 day lock rate
Est payment: $1,390
Fees in APR: ($153)
Internet direct lender since 1998. View rates & fees, apply/lock online 24/7
 

Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. Click here for more information on rates and product details.




Author: Brian McKay
May 24th, 2017