Question: What were the highs and lows of mortgage rates in 2016?
Answer: As you can see by the chart below we are ending 2016 with interest rates just below the highest rates we saw all year.
The year started with conforming rates starting to fall from near 2015 highs, dropping from 3.875% to 3.75% (using criteria I have used for my chart quotes for over 15 years as described below) in six weeks. After a brief pop up into March rates remained very steady through June before hitting the lows of 2016 in July at 3.25%. From July until election week rates were either 3.25% or 3.375%. Post-election rates quickly climbed to their highs of the year, reached two weeks ago at 4.125%.
We end 2016 with the conforming fixed rate only 0.125% higher than it was on January 1st, but 0.75% higher than our lowest rates of the year. We end 2016 with the 30 year fixed rate at its highest since September 2014.
If I had to use one word to characterize mortgage rates in 2016 I would use “stable.” Absent eight weeks when we saw rates drop steadily (five weeks at start of year) or increase steadily (three weeks in November) rates held steady within a quarter-percent range from February to November.
If I have to use a word to characterize what I think rates will do in 2017 I will use “inconsistent.” With a transition of leadership in Washington that includes not just the President but the heads of every regulatory agency, one party control of the legislative and executive branches, international turmoil through the transition period with tensions increased in the Middle East and with Russia, an economy that appears to be strengthening amidst an international economy that is struggling, I see little that would create an environment for “stable” rates.
Instability in the economy, global relations and politics generally means lower interest rates as investors flee to the safety of fixed return investments like mortgages. However positive economic outlooks lead to higher rates. Rates will be effected by whether investors see more of a threat from external forces than positive economic impacts from policies and regulations.
Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.
Rates for Friday December 30, 2016: We close 2016 with rates dropping for the first Friday September 23rd when rates had their last day on the low for the year. Flight to safety is the primary cause for the drop. There was scant economic news to impact rates this week, but plenty of political and international relations issues that did have an impact. With tensions ramped up between the United States and Israel and the United States and Russia investors have been moving from stocks to bonds to end the year. I see no lessening of the tensions for several weeks or more which could lead to lower rates—“could.”
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 4.00% Down 0.125%
30 year high-balance conforming 4.125% Down 0.125%
30 year FHA 3.50% Flat
30 year FHA high-balance 4.00% Flat
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages.
Thank you to everyone who helped make 2016 another great year at Stratis Financial. We are very grateful for the opportunity to help so many families with their mortgage needs. For those who put their own reputation on the line by referring us to family, friends, co-workers, clients, etc we are extremely thankful for your trust and confidence.
We are into our eighteenth year at Stratis Financial and we know we would not be without the support of our wonderful clients and business partners who continue to return for their mortgage needs and refer others we can assist with our expertise and service.
Cheers to a wonderful 2017 to you and your family,