The clock is ticking until the Federal Reserve could decide once again to raise rates, putting more pressure on mortgage rates to rise. For homeowners, that could be a big difference in the long run of paying off their mortgage.
In the past year, the Federal Reserve has raised rates up a quarter percent per quarter, and that trend could continue. Those rates have a big impact on homeowners who have variable rate mortgages. Their payments move up and down with the market.
Homeowners with fixed rate mortgages won’t see their rates move, which can make budgeting easier. When it comes to financial wellness, a mortgage is most likely one of your largest expenses, making it a top priority to make sure you’re getting the best deal possible.
KeyBank Branch Manager Christina Rowland knows firsthand how to help customers focus on their financial wellness by taking a fresh look at their mortgage. “Anybody who has a variable rate mortgage has an opportunity right now. With the potential rise in rates, locking in a fixed rate mortgage could save a lot of money.”
Rowland, who has 21 years of banking experience throughout Central Ohio, joined KeyBank in November and says the focus on financial wellness is about jumping on opportunities like this. “Clients are not taking advantage of this like they should be. We’re in the business of making sure our customers are reaching their financial wellness goals, and comfortable in the process. Right now, we’re reaching out to those who have variable rate mortgages to talk about refinancing. We want to make sure people are set up in the best way possible for the future.”
Mortgage debt is at an all-time high right now. According to the Federal Reserve, outstanding mortgage debt among all holders reached $14.58 trillion at the end of 2017’s second quarter. Since 2013, that debt has risen by $1.26 trillion, or 8 percent, while at the same time, the average mortgage rate has fallen from 4.39 percent to 3.90 percent.
Despite the drop in rates, mortgage loan applications have been falling. According to the Mortgage Bankers Association, those applications are down 3 percent last month, with refinancing down 8 percent. Refinancing is now accounting for nearly 49 percent of all applications being processed.
Rowland says the changes in rates are more likely to impact homeowners rather than businesses. On average, homeowners will use variable rate mortgages more often than businesses, which will rely on the fixed rate in order to avoid market influences.
There are many factors out of the control of a homeowner, and within control when it comes to finding a mortgage rate. Key factors within control include your credit score, the type of property being purchased, the length of a loan, loan amount, your down payment, and the home appraisal. Making the right decisions on those factors will influence your financial wellness for years to come.
The best advice for homeowners right now from Christina Rowland: “Get proactive. Reach out to a bank and review your whole financial wellness. The changing market will have a big impact, and that needs to be considered for your future.”
