Mortgage Lenders Look to December…and Not for The Holidays

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The holidays (the December ones) keep creeping up earlier and earlier every year. The Hallmark Channel will begin airing its annual barrage of Christmas movies beginning during late October. Normally, we would be inclined to rail against society ignoring perfectly good holidays such as Halloween and Thanksgiving…but this year mortgage watchers are just as much to blame as any. All eyes are on December with regards to the near-future of rates in the United States and around the world.

First, there’s the major factor that we’ve been hinting at for week’s now: Expectations are high that the Federal Reserve will finally pull the trigger and raise the Federal interest rate during December, an event that will most certainly raise mortgage rates as well.

We’ve been expecting this rise (if not two) all year, mind you, however different metrics have inspired Chairman Yellen and co. to hold back. The Board’s last meeting was apparently a contentious one, however, with multiple members dissenting on the decision not to raise during September. Such dissent suggests that the group’s next meeting, during December, will bring that rise.

So what does that mean for mortgage rates now? All we can do is read between the lines in the Fed’s announcements, such as the one scheduled for next week. If it seems to imply a rise, mortgage rates will rise to make the December shift less drastic.

The second major event happening this December involves the European Central Bank and its future plan for buying bonds. The Euro Zone’s central financial body has had a huge influence via its buying program, but rumors got out just a few weeks ago hinting at a slowdown, which itself inspired a “taper tantrum”-esque escalation in rates. We won’t get a formal announcement on the matter until early December, which means these two announcements could cause 2016 to go out with a metaphorical bang.

Metaphorical and relative. If anything, a rise in mortgage rates would mark a return to normalcy. We’ve enjoyed rates at and even below 3.5 percent for a significant chunk of 2016, which is unheard of. The fact that we’re calling the current 3.625 percent a scary rate shows how jaded we’ve become.

Might as well take advantage. If you’ve been floating, we strongly urge locking before things get “worse” aka normal.