Re:Mortgage rates have been rising at a pace not seen in alm...
by otterley on Friday May 25, 2018 @01:03AM
(#17150752)
For one, the Federal Reserve has been raising the overnight rate it charges banks. Commercial lenders typically try to maintain a certain interest rate "spread" between the Fed's overnight rate and the rates they charge mortgagors, so if the Fed's rate goes up, all lending rates tend to go up in tandem. (This is called "indexing.")
In the past year, the Fed's base rate has gone up 75 basis points (0.75%) and it looks like mortgage rates have basically gone up in lock step (actually a bit less -- last year a 30-year fixed was about 4.05%, today it's about 4.61%).
Usually, the Fed raises rates when it has significant inflation concerns -- so it's most likely the overall inflation risk that's driving increased rates across the whole market, and not something that points to an overheated real estate market in particular.
In the past year, the Fed's base rate has gone up 75 basis points (0.75%) and it looks like mortgage rates have basically gone up in lock step (actually a bit less -- last year a 30-year fixed was about 4.05%, today it's about 4.61%).
Usually, the Fed raises rates when it has significant inflation concerns -- so it's most likely the overall inflation risk that's driving increased rates across the whole market, and not something that points to an overheated real estate market in particular.