Top US mortgage lender says interest rates likely to rise as job numbers increase

A top U.S. lender says interest rates could soon begin to increase to regulate rising inflation.  (iStock)

Over the next month, interest rates will likely begin to increase as the job market continues to improve following the coronavirus pandemic, according to one expert from Rocket Mortgage, the largest mortgage lender in the United States.

"When I listened to [Federal Reserve Chairman] Jerome Powell’s speech at Jackson Hole, I heard him saying that the Fed has more tools now to control inflation and contain interest rates," said Bill Banfield, Rocket Mortgage executive vice president of capital markets. "Asset purchases and the federal funds rate can affect mortgage interest rates, but the biggest impact is the health of the economy overall. Mortgage interest rates are more likely to rise when jobs numbers increase and COVID cases wane."

Current mortgage rates remain at record lows. The average 30-year fixed-rate mortgage remains below the 3% mark at 2.87%, according to the latest Primary Mortgage Market Survey from Freddie Mac. Homeowners can take advantage of lower interest rates before they increase by refinancing their mortgage to lower their monthly payments. Visit Credible to find your personalized rate and see how much you could save on your mortgage payment.


Home price growth could moderate

As the economy continues to improve, home price growth could die down but will continue to increase in the coming months, according to Banfield. He says that is because the pandemic was not the sole cause of rising home prices. 

"While some like to blame the pandemic for the rising home prices, it is really a trend that’s been ongoing for more than a decade," he said. "If the heightened demand for homes and persistent low supply keeps up, the trend is likely to continue although price growth should moderate. The key to a normalized market is getting construction back to historic levels, providing ample supply for move-up buyers and, in turn, opening possibilities for those at an entry level."

Banfield explained that while the housing market remains hot, it is not as wild as it's been over the past year. Homeowners and homebuyers of single-family homes have more opportunities to enter the housing market over the next month with a lower annual percentage rate on their mortgage. Visit Credible to compare your home purchase and refinance options. Borrowers can get prequalified in minutes without affecting their credit score and save thousands over the life of the loan by acting now. 


Housing market likely to remain strong

Banfield said while home sales will eventually begin to cool, homebuyers over the next month will need to ensure they are prepared amid competition. 

"While the market will eventually cool, there is still intense competition throughout the country so it is key that buyers have their finances in order, documents ready and a willingness to hustle to get across the finish line," he said. 

Economic factors like inflation and employment statistics could determine how the Fed will respond over the next month, and whether or not they will raise rates. Homeowners can take advantage of low rates now to refinance their mortgage before the Fed begins to raise interest rates. Visit Credible to compare rates from multiple lenders at once and choose the one with the best mortgage rate that is the best fit for you to lower your monthly mortgage payments.

But even amid economic uncertainties, the housing market is likely to remain strong.

"We don’t think history will repeat or rhyme this go round," Banfield said. "In the lead up to the credit crisis in 2008, lending standards were much looser with lower documentation loans. Today’s loans have some of the highest credit standards in history as well as some of the largest equity positions. It’s simply a different lending environment that suggests housing can withstand shocks to the system."

Explore other mortgage and refinance options, such as changing your mortgage term or adjusting your rate. Contact Credible to speak to a home loan expert and get all of your questions answered.

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