The interest rate through the NACA purchase program(which is ALWAYS lower than the current market rate) is already risen .5% since October 2016.(Currently 3.625%). The question is, will interest rates rise in 2017?
There are a few solid facts that can give us a good indication where things might go in 2017.
After Trump’s win for president, investors pulled money out of the bond market and put it into Treasury Bills (“T-Bills”). The move of the money from the “private sector” to the “public sector” drove up mortgage rates since long term investments such as bonds are what fund much of the mortgage market. (Remember the term “Mortgage Backed Securities”? They’re part of the bond market.) With less demand for bonds, the yield/interest rate goes up in order to attract more investors. Thus mortgage interest rates go up since they are what provides the funds to eventually repay the investors.
While everyone talks about what the Federal Reserve does with interest rates, they don’t affect the mortgage market nearly as much and it’s a more indirect effect anyway. It’s pretty much a sure thing that the Fed will finally raise rates within the next few months. They were due to raise rates a year ago, but the sudden “Brexit” episode with the UK voting to pull out of the European Union stopped that from happening. Same thing really applies with mortgage rates. They’ve been due to go up for a while anyway. Don’t forget that we are still at some of the lowest rates in history, and they just can’t stay there forever. They’re going to go up in 2017, unless another unforeseen Brexit type surprise happens.
The crystal ball comes in to play when it comes to how much they will go up. We doubt it’s going to be much though. The housing market is still in short supply so rates aren’t going to zoom up or else lenders won’t be able to compete as much for mortgage business.
So we would say that you should look for mortgage rates everywhere to go up in 2017, though they may come down a bit before they go up any further, and I’ll be shocked if they go past 4.25% to 4.5% (which will probably equate to 3.75 to 4.0% for NACA 30-year). The 15-year “Freedom loan through NACA” will probably go up even less and is likely to become more popular as a result.
One thing remains true, NACA will always have the lowest interest rate on the market, typically by at least .5%. If you want to read about how to get a 0% mortgage through the NACA program, click here. You can always contact us if you have any questions.
Edit: 2 months later the NACA rate has risen to 4%, and market has been hovering around the 4.3-4.4~ range or so.