11/05/2021
If You Have Been Thinking About Refinancing, Now is the Time!
The Fed holds rates near zero yet some borrowing costs are already on the rise...
The Federal Reserve on Wednesday said it would keep its overnight lending rate near zero for now.
As the central bank starts to taper its emergency stimulus efforts, consumers will see interest rates begin to rise.
Mortgage rates are already higher.
Though the Federal Reserve didn't raise its benchmark rate Wednesday, the days of low rates are clearly numbered.
Reports of hotter-than-anticipated inflation have paved the way for the central bank to unwind last year's bond buying. While the Fed said that interest rates will stay near zero for now, the tapering of bond purchases is seen as the first step on the way to interest-rate hikes.
That will inevitably impact the rates consumers pay.
In fact, rates are already rising for long-term borrowing costs, said Yiming Ma, an assistant finance professor at Columbia University Business School. "Likely that's going to continue as the implementation starts actually happening."
The federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that's not the rate that consumers pay, the Fed's moves still affect the borrowing and saving rates they see every day.
Since the start of the pandemic, the Fed's historically low borrowing rates have made it easier to access cheaper loans and less desirable to hoard cash.
Once the central bank starts to reel in its easy money policies, consumers may need to work a little harder to protect their buying power.
Here's a breakdown of how it works.
Borrowing rates will rise
For starters, when the Fed starts to slow the pace of bond purchases, long-term fixed mortgage rates will edge higher, since they are influenced by the economy and inflation.
The average 30-year fixed-rate home mortgage has already risen to 3.24%, according to Bankrate.
"If they haven't already, now could still be a good time for some borrowers to consider refinancing," said Jacob Channel, senior economic analyst at LendingTree. "Even though rates are rising, they're still relatively low from a historical perspective.
"Nonetheless, the window for refinancers to get a sub-3% rate is rapidly closing." -Jessica Dickler MSNBC
If you have questions or what to review all of your options, give me a call!
Stonebridge Home Loans
1148 Street Road
Southampton PA 18966
NMLS # 51417
