Why Have Interest Rates Jumped to a 7-Year High?

    Why Have Interest Rates Jumped to a 7-Year High? | Simplifying The Market

    Why Have Interest Rates Jumped to a 7-Year High?

    Interest rates for a 30-year fixed rate mortgage have climbed from 3.95% in the first week of January up to 4.61% last week, which marks a 7-year high according to Freddie Mac. The current pace of acceleration has been fueled by many factors.

    Sam Khater, Freddie Mac’s Chief Economist, had this to say:

    “Healthy consumer spending and higher commodity prices spooked bond markets and led to higher mortgage rates over the past week.

    Not only are buyers facing higher borrowing costs, gas prices are currently at four-year highs just as we enter the important peak home sales season.”

    But what do gas prices have to do with interest rates?

    Investopedia explains the relationship like this:

    “The price of oil and inflation are often seen as being connected in a cause-and-effect relationship. As oil prices move up or down, inflation follows in the same direction.”

    You may have noticed that filling your gas tank has become substantially more expensive in recent months. The average national gas price has climbed nearly $0.50 from the beginning of the year, leading to the highest price for Memorial Day weekend since 2014.

    As rates go up, your purchasing power goes down, but don’t worry; rates are still well below the averages we’ve seen over the last four decades.

    “Freddie Mac said this year’s higher rates have not yet caused much of a ripple in the strong demand levels for buying a home seen in most markets, but inflationary pressures and the prospect of rates approaching 5 percent could begin to hit the psyche of some prospective buyers.”

    Buying sooner rather than later will help lock in a lower rate than waiting, as the experts believe rates will continue to climb. Even a small increase in interest rates can have a big impact on your monthly housing cost.

    Bottom Line

    If you are planning on buying a home this year, keep an eye on gas prices the next time you’re at the pump. If you start to feel a big jump in price, know that rates are probably on their way up too.

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    Jason Tumlinson

    About Me BCS LISTING & BUYER SPECIALIST Specialties: Buyer's Agent, Listing Agent, Relocation BCS DREAM HOMES WHY CHOOSE JASON AS YOUR AGENT? (CALL OR TEXT 979-255-6999) As an agent who's an expert in this local area, I bring a wealth of knowledge and expertise about buying and selling real estate here. It's not the same everywhere, so you need someone you can trust for up-to-date information. I am eager to serve you. Here are some of the things I can do for you: Find Your Next Home You need someone who knows this area inside and out! I can work with you to find the right home at the right price for you, including all the neighborhood amenities that matter - not to mention the essential criteria you have for your ideal home Sell a Home When it's time to move, you need someone who will advertise your home, show to prospective buyers, negotiate the purchase contract, arrange financing, oversee the inspections, handle all necessary paperwork and supervise the closing. I can take care of everything you need, from start to close. Consult on Home Selling Tactics Oftentimes buyers don't visualize living in your home the way you do. I can make your home attractive to its ideal audience - which can help you get top dollar. Things like staging the home, making repairs or minor improvements, or even simply painting the walls can be the difference between a home resting on the market and one that's sold fast. Please contact Jason at 979-255-6999 or email him at jasontumlinson@kw.com if interested in buying, selling or investing! Visit my website at www.bcsdreamhomes.com VLB, CMRS

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