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This article brought to you courtesy of Robert Groves, Senior Mortgage Broker at Minuteman Mortgage, News-Times Mortgage Expert.

Robert Groves

Americans will now have to adapt to a very different environment after enjoying benefits of historically low interest rates. The Federal Reserve will likely prolong a period of interest rate hikes to fight inflation. The record low mortgage rates of 3% are long gone. The recent Fed hike of the Fed Funds rate (the rate banks charge to lend each other money on an overnight basis) doesn't always affect mortgage rates. It has some influence but isn't directly related. These rate hikes affect Home Equity lines, credit cards, and Auto loans to name a few, but also help on higher interest received on savings accounts. Mortgage interest rates are tied to the 10-year Treasury note.

Global events like Russia's invasion can cause investors to rush to buy Treasuries, a safe asset. A higher demand for those lower yields and reduce mortgage rates which tend to decrease in times of precarious events, like Covid. But strong US economic growth, and faster inflation are sending the 10-year Treasury yield up, bumping up the mortgage rates. The interest rates have jumped a full percent since December 2021. The length of the conflict in the Ukraine will determine how much downward pressure gets applied to rates and could further complicate the Fed's task of taming inflation without sparking a recession.

Overall, interest rates are still low from a historical standpoint unlike October 1981 when FreddieMac reported the 30-year rate of 18.6%. Food for thought.

Robert Groves, Senior Mortgage Broker

Minuteman Mortgage

5635 N.E. Elam Young Parkway, Suite 308

Hillsboro, OR 97124

602-460-2374

www.MinutemanMortgage.com

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