This BLOG On Federal Reserve Board Increases Interest Rates By 0.25% Was Written By Gustan Cho NMLS 873293 of Gustan Cho Associates News
As expected, the Fed increased the Funds rate by 0.25% last week.
- The news of the Central Bank Increases Interest Rates was expected and the mortgage markets already had this news factored on mortgage rates for the many weeks
- There were no major interest rate changes with the news of the Federal Reserve Board Increases Interest Rates by 0.25%
- The interest rates were factored in with rumors of the Federal Reserve Board Increases Rates last month
In this article, we will discuss and cover how the Feds Increases Interest Rates By 0.25%.
Hot Housing Market Nationwide
Both HUD and the FHFA have increased FHA and Conforming Loan Limits in January 2018 for two years in a row due to rising home prices nationwide.
- Housing prices have been rising double digits in many parts of the county, especially in California
- There are areas in California where home values have doubled since 2009
- Many real estate and mortgage experts were expecting a slight correction
- There does not seem to be any real estate market correction insight
- Many renters are in a rush to qualify for mortgages due to the rising rental prices nationwide
Both government and conforming mortgage guidelines have loosened up to promote homeownership.
Federal Reserve Board Increases Interest Rates: Highest Rates In 10 Years
Mortgage Rates are the highest since the 2008 Great Recession and Real Estate Collapse.
- Mortgage Rates has been consistent at 3% to 4% range until President Donald J. Trump got elected
- With the combination of tax cuts and the great economic news during the Trump Administration, home prices have skyrocketed
- A great economy is always good but home prices skyrocketing in such a short period of time can trigger a larger than an expected market correction
- One of the major reasons why the Federal Reserve Board Increases Interest Rates is to cool down the pace of the hot economy
- However, there is no sign of a housing market slowdown even with the highest interest rates in 10 years
- There is still more demand for housing than there is inventory
- This is in all states and not limited to a geographical area
The higher interest rates have definitely hurt many mom and pop mortgage brokers where their niche is refinancing. Difficult to refinance with higher rates.
How Federal Reserve Board Increases Interest Rates Affect Americans
The Federal Reserve Board Increases Interest Rates to 1.75% to 2.00% is going to affect mortgages that have impacts on Prime Rates.
- This is due to Prime Rates following Feds Fund Interest Rates
- Consumers who have lines of credit that are attached to Prime Rates such as HELOC/Second Mortgages and/or credit cards, they can affect their interest rates up by 0.25%
We expect the Federal Reserve Board Increases Interest Rates again at least several more times this year.
Waiting Period After Housing Event Versus Increasing Home Values And Rates
Real Estate values have been increasing double digits in any areas in the United States since the Real Estate Market Crash of 2008.
- There are many qualified homebuyers with prior housing event such as foreclosure, deed in lieu of foreclosure, short sale, and bankruptcy who cannot qualify for government and conventional loans
- All government and conforming loans have a mandatory wait period after bankruptcy and foreclosure in order to qualify
- Many home buyers have re-established credit, have the down payment, and are paying high rents
- They are seeing property values increase and mortgage rate rise before their eyes
The great news is that Gustan Cho Associates Mortgage Group now offers non-QM loans.
Qualifying For A Mortgage With A National Lender With No Overlays
Non-QM mortgages are portfolio loans where there is no waiting period after foreclosure, deed in lieu, short sale, bankruptcy. Home Buyers with a prior housing event and/or bankruptcy no longer need to wait until their waiting period has been met. 10% to 20% down payment is required. There is no private mortgage insurance on non-QM loans. Mortgage Rates depend on the down payment and borrower’s credit scores. Home Buyers do not have to witness property values increase before their eyes anymore. They now have alternatives to traditional financing. The Federal Reserve Board is expected to increase rates throughout the year and going into next year. Non-QM Loans benefit home buyers to purchase a home now before housing value further increases.
July 11, 2018 - 4 min read