The average 30-year fixed mortgage rate increased to 3.94 percent from 3.57 percent last week.
Nela Richardson, the chief economist at Redfin, explains that the sharp rise is due to Wall Street’s optimism about president-elect Donald Trump’s plans for infrastructure spending and tax cuts. The new administration’s strategy for housing related policy issues is a little less clear.
The current mortgage rate is still lower than it was at the same time last year (3.97 percent) and considerably lower than its peak. In October 1981, the average mortgage rate was 18.6 percent.
“We expect rates will be higher in 2017 than the rock bottom rates of 2016,” Richardson said. “However, we don’t expect that the rise in rates will be high enough to significantly affect consumers’ plans to buy or sell. There are a host of reasons why a family chooses to purchase a home. Rates are just one of them. In that sense, it’s the economic basics of everyday life – job relocation, family changes, lifestyle preferences, desire for more highly ranked schools and shorter commutes – that will continue to be the key drivers of a family’s decision to buy or sell, regardless of who resides in the White House.”
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