With an unknown future, and the broader economy still recovering from the pandemic. What’s to happen with interest rates? Well, it’s. Well, interest rates typically improve on bad economic news. If you haven’t been watching the market, pay close attention to the following information…

Generally, in the world of mortgages interest rates drive home buying and refinancing. Low-interest rates support both loan purposes. Beyond that, it relates to budget and income. Budget and income are supported by consumer confidence and feeling good about their income. Across the United States presently right now people are quitting their jobs over vaccine mandates, and it was just released on October 21st that negative GDP means negative growth is in our future. Add that to the rise in the workforce, and that doesn’t spell good news for the economy. Such a recipe might take months to play out. Generally, what will happen in a situation like that is that people will move their money from individual equities i.e., the stock market that thrives on positive economic news, and they will move that money directly into the fixed income market AKA the bond market, mortgage backs securities. This will drive the yields up in the fixed income market and the rates to the consumer lower.

Now what we have at the same time is a federal reserve that has signaled a possible change to monetary policy and they’re now going to be tapering the fed funds rate. If that happens, you still have a recipe for lower interest rates because the broader economy is not recovered. So, what does this mean for mortgages, and should you buy or a refinance house today? Well, no one knows what the future is going to hold. What we do know is what interest rates are right now. let’s say you have a benefit on a refinance right now to lower your interest rate, reduce your term for example going from a 30-year mortgage to a 20-year or a 15-year mortgage, you’re happy with the lower interest rate, and there’s the cost-benefit. You might just want to consider pulling the trigger now because things can change as the economy continues to change and evolve. These are initial projections here at the tail end of October poised to transpire at some point in 2022 – 2023. We just don’t know what that’s going to look like yet but what we do know is that if rates go up at the end of 2022 or any point and there’s any signal of an unstable economic climate that will keep rates from either rising or will force rates lower, perhaps back down to the levels that they are today in the 4th quarter of 2021. What that also means is that if you’re thinking about buying a house, they’re more than likely going to have more upward gain in buying a home today than you will by waiting, and here is why. It’s no surprise there are shortages in multiple industries, particularly housing. There’s still a very large demand for housing and there are not a lot of houses in terms of supply on the market. This is creating a frenzy and multiple offers on houses in almost every market throughout the United States. As a byproduct of that, it’s more than likely that if you can buy a house, you do what it takes with your lender and realtor to be successful, you’re going to do very well for yourself financially and probably scoop up a historical interest rate at the same time.

So, the broader picture for mortgage rates as it pertains to housing rates is not for sure but probably will improve at the tail end of 2022 – 2023 and come back down to the levels they are right now in the tail end of Q4 of 2021. This is something I think about if a house or a refinance project is in your future. As always if there is a net tangible benefit today take it as the opportunity could always be gone tomorrow.

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