Home Loan Interest Rates Climb
Home loan interest rates continue to climb, but why and what can we expect in the coming months. Read about interest rates below the video, if you'd prefer.
Why are home loan interest rates rising so quickly? Rates started the year around 3.5% for a 30-year fixed but are now close to 6%. Though there are many factors that impact home loan rates, right now the 40-year high inflation is the main driver. Inflation has been running over 5% for the past 13 months, and more than 8% for the past few months. With no sign of improvement coming soon, the federal reserve has been raising the federal funds interest rate. That impacts all interest rates, including the 10-year treasury bond, which is what the home loan rates tend to mirror. The Consumer Price Index numbers released on Wednesday were bad, showing a 9.1% increase so the feeling on Wall Street is that the Fed will raise rates more than was planned. Because home loan rates factor in what is expected to happen, interest rates have jumped again in anticipation of higher and faster rate hikes than were originally expected. So while there are many factors that go into how these home loan rates get priced, right now just keep your eye on the inflation rate. Home loan rates will continue to climb until inflation is under control.