The Federal Reserve just conducted their 4th meeting of 2019. These meetings discuss the direction of our financial policy and directly influence mortgage rates. Over the last few years the reserve has kept rates low with a few rises here and there. The goal has been to maintain the economy in the steadiest way possible. They figure by keeping the cost of money low it will spur more activity and people will spend more. This theory has worked well over the last few years, we’ve experienced enormous growth in the real estate market, almost to a point of frustration. Home values are now higher than they were pre-2007 / 2008.
In their June 18-19 meeting the vote was 9-1 in favor of keeping rates where they are. 1 person in favor of raising the rates. This means we will see the market steady itself in the midst of anticipating a drop or rise. They are receiving pressure from the POTUS to cut rates for further stimulation of the market, but they’ve held out, the result is a small suggestion that later in 2019 /early 2020 we may see a drop in rates.
What Happens When Rates Rise?
It’s been proven that a rise in rates causes more economic activity than a drop. When people realize they may be missing the boat on low rates, they seem to scramble to the finish line. But when rates drop they tend to wait it out to see how low they go. A problem people face when everyone scrambles is competition, when you have a sudden influx of borrowers diving into the real estate market you get bidding wars and inflation.
The goal with any economy is the have consistent and steady growth, this is what the Federal Reserve is trying to do with policy, but the economy is made up of millions of people and situations that are unpredictable, there are certain results we can expect when an action is taken, but a good part of the future is influenced by political and natural forces. If I were to guess I would see mortgage rates remaining steady throughout 2019 with the occasional small rise or fall; then 2020 we will see the economy level out and maybe drop some. This will result in a drop in mortgage rates and another spur of activity. I do not foresee another “housing bubble” or massive recession like 2007 /2008.
Thanks for reading!
What Can I Do Now?
You can Sign up for mortgage rates here
Read the About me section and learn more about how I conduct business
reviews are a great way to see who you are dealing with
if all that checks out you can apply here
- C) 920-530-4484