Mortgage rates in key housing markets across the country are on the rise, according to HousingWire. In fact, 49 states experienced an increase over the week ending on Sunday Feb. 19. Economists and real estate experts were unsurprised by this development, as these figures have been trending upward since Election Day. Most expect rates to continue to move upward throughout 2017, as various market forces and political developments take hold.
Federal Reserve could catalyze rate climb
Earlier this month, members of the Federal Open Market Committee met for the second time since instituting a rate hike in December, The New York Times reported. The group ultimately passed on an additional increase but established the rationale? for further hikes down the road. Of course, this would further bolster mortgage rates for buyers looking to settle down over the next year.
Builders contribute to increase
Board members at the Federal Reserve Bank are not the only ones impacting rates. Homebuilders have an effect as well, according to Builder Magazine. When construction firms spend excess money on new units, economic development slows and interest rates dip. This has been the case in recent years. In the wake of the housing collapse, builders restarted aggressive operations and put up new properties to meet demand. However, worker shortages, supply challenges and decreased buyer interest have slowed things as of late, Bloomberg reported. Now, many in the industry are scaling back. If this continues long term, mortgage rates could tick upward as a result.
The Trump administration settles in
External political factors are also affecting rates. Many economists expect President Donald Trump to have a direct impact, as he rolls out his economic agenda. Even so, the president has shown his hand when it comes to the housing market, Business Insider reported. Soon after taking office in January, Trump suspended an interest rate cut for Federal Housing Administration loans initiated by the Obama administration. Analysts expect his administration cabinet? to continue on this course and promote policies designed to accelerate growth and, in turn, bolster rates.
With these variables in play, many expect rates to rise over the course of 2017 and beyond. For example, Goldman Sachs project them to reach 5.5 percent by 2019, according to Reuters. Of course, this number is quite low compared to historical averages.
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