October 12th, 2018 – Mortgage rates have hit a 7-year high to 4.76% this for the week on the heels of stronger-than-expected economic indicators, such as consumer buying behavior. The rates are also rising likely in response to the Fed’s decision to raise benchmark interests rates last week another quarter of a percent.
The interest rate hikes come in response to economists warning about the growing threat of inflation as the macro-economy continues it’s boom cycle. Raising benchmark interest rates are the primary tool the Federal Reserve has at it’s disposal to quell an overheating economy.
As benchmark rates rise, so too do 30-year fixed mortgage rates.
Many economists predict mortgage rates will rise to at least 5% before the end of year, which is nothing to be alarmed about (historically, five percent is still relatively low.)
The problem, instead, may be the concurrence of rising interest rates with housing affordability being at an all-time low. Housing prices are at a decade-long high in Palm Beach County, with the median home price hovering around $350,000. That’s already too expensive for many people. Even modest increases in the benchmark mortgage interest rate can turn hopes of buying a home into a fantasy.