Being smart with $$ -- Lock in Your Mortgage Now?

Lock in your mortgage now?  How many times have you heard that the Fed is going to raise rates so you should buy a house now or refi your mortgage quick!? The Fed did raise the Fed Funds Rate last week, by 1/4 of a percentage point, and may raise it more. But that doesn't mean 30-year MORTGAGE rates are rising. In fact, 30-year mortgage rates are the same today as they were the day before the Fed increased rates. That's because the Fed only changes very short interest rates, actually the interest rate used for one-day loans. Fixed-rate mortgages on the other hand, use long-term rates that are more affected by economic factors. Other long-term rates are actually lower today than they were the day before the fed increased short rates and that's because some economic data was weak. Mortgage rates and other interest rates are historically low and it is entirely likely they will rise at some point. But before someone convinces you that you have to act today before the Fed raises rates, remember that that person may not understand how market interest rates work.

Larry Pike, CFA

Client Priority Financial Advisors LLC