What is the current interest rate? Are they increasing? When will they increase?
As a loan officer these are questions we get daily. And the honest answer is “It’s complicated.”
In March of 2020, when COVID-19 became a Pandemic, the stock market had a historic drop and the Federal Reserve met to determine how to keep the economy afloat during these uncertain times. What the Fed does to prevent recessions is lower interest rates. They can purchase mortgage-backed securities, and when they do this, mortgage rates drop. The Fed started buying mortgage-backed securities at record levels, and in 2020 and 2021 rates dropped to the lowest levels ever, which sparked a home buying frenzy which drove prices up.
Now, as the economy and employment are stabilizing, the Fed had decided to pull back their mortgage bond purchasing, which will lead to higher interest rates. It’s looking like they will announce the schedule of the Fed’s “Taper” during their November meeting. But one thing is certain: rates will start increasing by the end of the year.
The good news is that mortgage rates will still be at historic lows, making it a great time to purchase a home as rents continue to rise. But if you’re looking to get into a home during one of the best interest rate environments recorded, getting a home under contract in October or November of 2021 would be your best bet.
3489 E. Baseline Rd
Gilbert, AZ 85234