The floor is in for mortgage rates, and the direction now is up. The conventional wisdom might hold that residential real estate sales should slow, but if the last few months have taught us anything, it’s that conventional wisdom is too … well, conventional.
The Wall Street Journal reported Wednesday (Jan. 4) that the weeks since the 2016 election have seen average rates for fixed-rate, 30-year mortgages soar to the highest levels seen in nearly three years, and that rate stood at 4.4 percent headed into the last week of the year. That rate dipped just a bit — a few basis points, really — to 4.37 percent at the end of the year.
It may be not all that surprising to note that rates have been on the upswing since the Federal Open Market Committee hiked targets for the federal funds rate, with an eye on a tightening employment market and with full attention on inflation.
And yet, noted WSJ, the housing market is proving resilient. The National Association of Realtors has estimated that existing home sales are on track to reach 5.4 million for the year just ended, and that tally is more than 3 percent higher than the previous year and marks a peak since 2006. Separately, earlier last month, real estate web site Trulia said that the outlook for 2017 seems sanguine. A survey of more than 4,000 adults found that a scant 18 percent of renters looking to buy a home were worried about the impact of rising rates.