Mortgage rates may rise even if Fed’s rates don’t
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Many involved in the mortgage industry are expecting the Federal Reserve to stop raising interest rates this year. If that happens, real estate agents say it would be good news for the real estate market. Mortgage rates would remain historically inexpensive and people will continue buying homes. |
When the Fed started raising interest rates June 2004, the rates charged on 30-year mortgages increased only slightly. While the Fed funds rate went up from 1 percent to 4.5 percent, the interest rate on 30-year mortgages hovered in the 5.5 percent to 6.35 percent range. The reason for the difference, experts say, is that banks don’t control mortgage rates any more. Ever since the recession of the early 1990s, banks have sold off most of their mortgage loans to major secondary mortgage lenders — Freddie Mac and Fannie Mae.
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