While changes by the Federal Reserve to interest rates do not directly set a home loan’s interest rate, it does have a direct influence on the interest rates charged by mortgage lenders. The rate set by the Federal Reserve has to do with the short-term rates various financial institutions charge each other in order to ensure they satisfy required Federal Reserve levels. As rates change, they have a “trickle-down” effect on the rates for secured and unsecured loans, as well as credit cards.

home loan’s interest rate

On March 15, 2017, the Federal Reserve increased rates 0.25 percent to make the current rate 1 percent, up from the 0.75 percent which took effect with the last increase in December 2016. This was the third time since the 2008 housing market crash that the Fed increased rates. With the economy continuing to show strong signs of improvement, along with a recovering housing market, it is expected the Feds will increase rates at least two more times later this year, using the same conservative approach they have held with the previous two increases.

Mortgage interest rates have slowly increased, from below 4 percent last fall, and are now up hovering around 4.4 percent on 30-year fixed mortgages. The interest rate can and does vary based on the type of home loan one is considering, as well as on people’s credit histories and credit scores.

To avoid future rate increases, now is a great time to lock in your rate and purchase or refinance a home. For assistance in finding the best home loan to suit your needs, contact the mortgage experts at Elite Financial by calling (800) 908-LEND (800-908-5363) or 805-494-9930 today!