Today’s Mortgage, Refinance Rates: Dec. 27, 2022 | Mortgage Market Expected to Normalize by 2024 – Business Insider
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Average 30-year fixed mortgage rates dropped around a full percentage point over the past few weeks, and they remain low today.
Are mortgage rates going up?
Mortgage rates started ticking up from historic lows in the second half of 2021 and have increased significantly so far in 2022. But mortgage rates dropped recently, and they may not trend back up again this year.
In the last 12 months, the Consumer Price Index rose by 7.1%. The Federal Reserve has been working to get inflation under control, and is expected to increase the federal funds rate once more this year, following increases at its previous six meetings.
Inflation remains elevated, but has started to slow, which is a good sign for mortgage rates and the broader economy.
How do Fed rate hikes affect mortgages?
The Fed has been increasing the federal funds rate this year to try to slow economic growth and get inflation under control.
Mortgage rates aren’t directly impacted by changes to the federal funds rate, but they often trend up or down ahead of Fed policy moves. This is because mortgage rates change based on investor demand for mortgage-backed securities, and this demand is often impacted by how investors expect Fed hikes to affect the broader economy.
As inflation starts to come down, mortgage rates should, too. But the Fed has indicated that it’s watching for sustained signs of slowing inflation, and it’s not going to stop hiking rates any time soon — though it has started opting for smaller hikes, starting with its 50-basis-point in December.
Are HELOCs a good idea right now?
Many homeowners gained a lot of equity over that past couple of years as home prices increased at an unprecedented rate. But because rates are so high now, tapping into that equity can be expensive.
For homeowners looking to leverage their home’s value to cover a big purchase — such as a home renovation — a home equity line of credit (HELOC) may still be a good option.
A HELOC is a line of credit that lets you borrow against the equity in your home. It works similarly to a credit card in that you borrow what you need rather than getting the full amount you’re borrowing in a lump sum.
Depending on your finances and the type of HELOC you get, you may be able to get a better rate with a HELOC than you would with a home equity loan or a cash-out refinance. Just keep in mind that HELOC rates are variable, so if rates start to trend up further, yours will likely increase, as well.
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