Most of us favor a high degree of predictability when it comes to things like the interest rates on mortgages. In that realm, “poised” is a bad word. When anything is poised, it means it’s about to do something different: change. For those who like predictability, change is unwelcome.
But this week should provide both good and bad news when it comes to change and St. Cloud mortgage rates. For once, a change in the immediate future is pretty nearly a sure thing. Although rates are poised, they’re poised for a comfortingly predictable change.
What happens after that is a different story.
Up until very recently, the mortgage interest rates offered to St. Cloud home buyers has been an island of calm in a sea of…well, less calm, if the year’s turbulent election cycle is any example. Predictability has been in short supply—except when it comes to mortgage rates.
For a decade, St. Cloud mortgage interest rates have been tucked safely within a snooze-worthy range—right there at the bottom of the charts. No matter how often the experts predicted that a rate rise was imminent, they were proven wrong again and again. Only one time did it happen. The flat line down there at the bottom of the rate charts stayed remarkably flat.
But this week, mortgage rates are poised!
The triggering mechanism for a rate boost is, as always, the Federal Reserve. When it votes to raise its Fed Funds rate, banks pay more for cash; and charge more for access to the money they lend. This isn’t a one-to-one cause and effect, but it’s generally the case. Only once in the past decade did they nudge rates even a quarter of a percent. But even in that instance, for reasons still somewhat mystifying, mortgage rates went down instead of up (before returning to the flatlands).
This week, the Fed is poised to raise rates—but this time it’s all but certain actually to happen. The certainty among analysts made comforting reading for those who relish predictability. MarketWatch headlined “Fed to hike interest rates.” Forbes didn’t even wait, headlining on Sunday, “Week Ahead on Wall Street: Fed Hikes Rates” as if it were a done deal.
But if a Fed Funds rate hike announcement on Wednesday is knowable, what happens down the road is anything but. As USA Today put it, “The Federal Reserve is virtually certain to raise interest rates this week for the first time this year, but the course of future hikes has suddenly become cloudier.” Bloomberg said, “the pace of monetary tightening is uncertain.”
In other words, the previous certainty that future interest hikes would be slow and deliberate was suddenly in question. Future moves might be more abrupt than anyone thought...or not. For those who favor predictability, after this week, an unsettled future awaits.
One fact that doesn’t depend on what happens down the line is that St. Cloud mortgage rates remain unusually favorable. These are likely to be looked back upon as halcyon days for home buyers and the sellers whose listings showed unusually affordable monthly payment numbers. At least for now, it’s predictably a most opportune time to give me a call!
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