December seems to be the month the Fed is most comfortable with. They raised short-term rates in December 2015 for the first time since 2006 and now it looks almost certain that they will raise them again in December 2016.
Last year was interesting in that all rates moves up prior to the Fed raising rate in December but in the months following the hike, mortgage and treasury rates actually fell.
Mortgage and treasury rates move up or down based on economic reports. The months following last year’s hike showed that economic indicators were average at best and because of that rates came down.
In late June, we had the surprising results of Britain’s historic vote to exit the European Union, which brought a lot of volatility to the market, pushing rates down even more.
Most recently, Gross Domestic Product or GDP showed the 2nd quarter running at 1.4 percent which was below the 2.5-3.0 percent pace which is considered healthy for the economy.
I believe that we are going to see all rates go up when the Fed raises rates here in December, but if the economy stalls first quarter, we will see mortgage rates come back down in late spring. This should be very welcoming to buyers as we enter into another spring real estate market, which is usually the busiest.
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