The past seven years have been an economic anomaly. We had the greatest run-up of housing prices in history from 2001 to 2008, followed by a massive home price crash that took the economy with it. The Federal Reserve pumped trillions of dollars into the economy starting in late 2008, which have kept rates low for a long time.
World Events Could Shape 2015 Rates
Historically, nothing has been safer than U.S. bonds. While returns are low, at least the investment is safe. While the Federal Reserve recently eliminated quantitative easing, meaning they have stopped pumping money into the system, international investors have jumped in, resulting in mortgage rates barely moving.
If the world looks safer in 2015, money could flow out of U.S. bonds into international ventures that could yield higher returns. If there continues to be instability in the world, historically investors from all over the globe invest in United States based securities, which would keep interest rates low.
What Happens if Safe-Haven Buying Diminishes?
The average rate from 1964 – 2014 is 8.24% (double the level of current rates). If we employ the theory that the past reveals possibilities about the future, we would say it is not a matter of IF but WHEN rates will rise.
Economists predict that there is a greater likelihood of mortgage rates increasing this year. With the elimination of quantitative easing, combined with European countries economies stabilizing, there will be pressure to increase bond yields that results in higher mortgage interest rates. Presently, rates are very low and attractive. If you are considering purchasing a new home or refinancing, now is the time to take action.
Contact us TODAY to set up an appointment to review your options and assess your needs! Tradition Mortgage offers numerous mortgage options and can tailor a program that meets your long and short term financial goals. Our mortgages are designed with your financial wellness in mind.