The Federal Reserve announced that it will no longer be purchasing bonds as of March 2022, rather than the expected date of June 2022. The discontinuance of buying bonds will speed up the end of the economic stimulus and will motivate rate increases in this upcoming year.
After the devastating effects of the coronavirus, the Fed backed the US economy by keeping some of the lowest mortgage rates in history. Borrowing rates stayed at incredibly low rates because the Fed continued to spend double their typical budget of $15 billion a month purchasing bonds. In order to accelerate the economy’s growth, the Fed has decided to push forward their timeline of eliminating bond purchases.
Officials are expecting rates to increase three times in 2022 due to inflation related to the imbalance of supply and demand. The current low mortgage rates have marked the worst recession in a lifetime, but the actions taken by the Fed should move the country back into a state of active employment, higher saving yields, and more expensive borrowing costs.
What This Means for Homeowners
Homeowners and would-be homebuyers should expect higher mortgage rates and associated costs. If you have been thinking about buying a home or refinancing your current home, now is the time to do so as interest rates will increase, and inflation will soar. If you have an adjustable-rate mortgage, you may want to get yourself into a fixed rate mortgage ahead of the curve!
Rising rates could affect the equity of your home. If you have equity in your home, there are several options that can help you against the Fed’s tight policy, such as, cash-out refinancing, home equity loans, or a home equity line of credit. If someone has equity in their home, it means their home is worth more than the outstanding balance of their mortgage.
First time homebuyers can expect house prices to moderate some due to limited inventory and increasing rates. They may see some struggles with finding their dream home, but we have a team of trusted professionals to help you get the right mortgage!
Call us today to talk about your options. At JTS & Co., we offer a variety of home mortgage loans and refinancing options to suit your needs. Reach out to one of our licensed mortgage professionals today!
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