Mortgage rates this month show a slight increase as the financial industry worries of economic troubles following China's financial woes. China has the second largest economy in the world behind the US. The US has become increasingly more intertwined with China through global trade. At the moment, China is facing their worst economy since 1990. China has a very interesting economy. They grew like a root when they began providing manufactured goods at a lower price than other developed nations. After this, they began a series of infrastructure programs and many developers built tens of thousands of developments to bolster their GDP. Unfortunately, due to low wages, most Chinese citizens were not able to buy into these condos, apartments, etc. Eventually these developments and infrastructure projects became ghost towns. Without revenue, these developers began going bankrupt across the country, which has led to a massive decline in China's economy. There is much, much more to China's plight than the failed developments and infrastructure, but this has been a major factor in China's decline. Our global economy means that when one of the major players feels stresses; everyone else will, too.
In response to China's woes, many banks have ticked up their interest rates on mortgages in anticipation for a ripple. There will surely be more economical responses to the global economy taking a hit, but for now the mortgage rate hike seems to be among the first. According to the article, "Mortgage Rates Hedge Higher This Week," from Realtor Magazine, the 30-year-fixed-rate mortgage rate came in at an average of 3.89% this week. That is up from 3.84% last week. Another reason for this hike is that the lending institutions are anticipating the Federal Reserve to increase interest rates across all financial platforms some time later this month. I have mentioned in previous posts that the Fed has been planning to increase interest rates for some time now and purchasing a new home before this happens would be wise. It will certainly not be an aggressive increase, but it will definitely be noticeable. The Federal Reserve is in need of revenue themselves to try what they can to dwindle down our national deficit and provide more operational funds for our Government. Many of these financial institutions are anticipating this rise and they seem to think that their new rates will be near the Fed's new rates. Even with the new rise in interest rates, we are still at a lower average for mortgage rates than we were a year ago!
Like always, if you or anyone you know needs a Realtor to help you buy or sell a home, let me know! The market will begin to cool down as we move into fall making it less competitive for buyers. However, many sellers should still be able to sell their homes with favorable outcomes for some time to come.
Troy Franklin Gandee