Mortgage Rates Expected To Soar

Why are the mortgage interest rates going up?

The mortgage interest rates are going up because the Federal Reserve is raising the federal funds rate. The federal funds rate is the rate at which depository institutions lend reserve balances to other depository institutions overnight on an uncollateralized basis. The federal funds rate is important because it determines the cost of borrowing for banks. When the federal funds rate goes up, the prime rate goes up, and when the prime rate goes up, the mortgage interest rates go up.

Why is the Federal Reserve raising federal funds?

The Federal Reserve is raising the federal funds rate because they want to keep inflation under control. When the economy is growing too quickly, inflation can become a problem. To keep inflation in check, the Federal Reserve raises interest rates, which slows down the economy. The Federal Reserve is also trying to prevent the economy from overheating. An economy that is growing too quickly can lead to inflation, but it can also lead to asset bubbles. Asset bubbles are when the prices of things like stocks and real estate get too high and then crash. The Federal Reserve is trying to avoid an asset bubble by raising interest rates.

How will increased mortgage rates impact home buyers?

The impact of increased mortgage rates on home buyers will vary depending on the buyer‘s financial situation. Those with good credit and a large down payment may not be affected as much as those with bad credit or a small down payment. The main concern for most home buyers when mortgage rates increase is the impact it will have on their monthly payments.

For example, a 1% increase in interest rates would increase a monthly mortgage payment by approximately $100 on a $200,000 loan. Buyers who are pre–approved for a loan and have a rate lock may not be impacted by an increase in mortgage rates. However, buyers who have not yet locked in a rate could see their monthly payments increase if rates go up before they close on their loan. In general, increased mortgage rates will make it more difficult for buyers to afford a home. This could lead to fewer buyers in the market, and may cause prices to drop.

Will higher mortgage rates cause more foreclosures?

There is no definitive answer to this question as it can depend on a number of factors. In general, higher mortgage rates can make it more difficult for borrowers to make their monthly payments, which could lead to more foreclosures. However, other factors such as unemployment or a decrease in property values can also play a role in increasing the number of foreclosures. For more information about foreclosures or debt management of any type of loan, call a Dallas bankruptcy attorney today at 214-440-1414.