Editorial: Interest Rate Rises On The Horizon

Posted by:  Michael Chalker
2017-09-11 07:57:50

Editorial: Interest Rate Rises On The Horizon

Interest rates WILL be going UP, and you better get off your duff, off the couch, and start doing something about it quickly.

Just a moment -- Before you get too worried, this isn’t meant to flood your mind with images of dread. Rather, I am asking for your attention, and want you to have a measured response.  

With my 50,000+ hours of being in the mortgage business, and delivering a fundamental dream of homeownership, I am concerned what the near future is going to look like as it relates to interest rates.  The Federal Reserve has been the one and only purchaser of Mortgage-Backed Securities (MBS).  It is basically a commodity like oil, coffee or pork bellies.  This has resulted in manipulating the Federal Reserve to keep home interest rates artificially low for an extended period.  That being said, there are always items that cause rates to dip lower, but that is generally just normal in any stock/bond/commodity.  Now, the Federal Reserve is going to stop buying them and start selling them back in the open market.  This concerns me because this has NEVER happened before. There is a storm brewing, and we do not know how bad it will be!

I do not think that rates will go above 6% or anything like that, but on a $300k mortgage, not including taxes or insurance, going from 4% to 6% would change the payments from $1466 to $1799 - a $366 increase.  For a lot of folks, that is a LOT of money!

This information is not meant to cause an overly large amount of fear, but is intended to make you aware that, if you are thinking about purchasing or refinancing, you should act sooner rather than later. My background makes me more of an advisor than a “sales guy,” so if you would like information in advance of these market changes, do not hesitate to contact me.


Michael Chalker is the Branch Manager of our Gilbert branch.

Categories:   tips

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