By Jonathan Smoke
Much of the country is looking at one more very big bite of winter before spring officially begins, but for the residential real estate market, spring is already underway—and new home buyers are sprouting everywhere.
Job creation so far this year is 30% stronger than in the same period last year. Unemployment is close to a low of more than nine years. Wages and income are also starting to pick up to growth levels we haven’t seen since 2009.
And with more money in their bank accounts, consumers are feeling a boost in confidence that leads to big purchases … like homes! This year’s economic growth gives them another reason to buy sooner rather than later, because stronger economic growth also means higher interest rates.
January and February saw rates in line with what we saw at the end of 2016. But in the last two weeks, we’ve seen the average rate for a 30-year conforming mortgage increase by almost a quarter of a point. That’s because the market is expecting the Federal Reserve to raise short-term rates when the board of governors meets this week.
Mortgage rates will likely stay close to this level until we hear more about additional rate increases later this year. The expectation is for three increases this year. If economic data continue to show growth in inflation and wages, those three increases could actually become four.
This means that rates will… (to read the rest of the article, please visit here)