Wells Fargo & Co (WFC) – News Flash: Mortgage Rates Will Head Higher

Mortgage rates will head higher
The observation that higher mortgage rates aren’t putting an undue damper on the demand for purchase-money mortgages, and thus housing, is very good news. This is because mortgage rates are bound to go even higher. It’s inevitable.

If you ignore the distraction of surging rates for the moment, you can’t help acknowledging that mortgages are still dirt cheap. The average interest rate on a 30-year fixed-rate mortgage since 1971 is 8.61%. At the end of last week, it was 4.37%, or roughly half the long-run average.

At this point, it’s no longer a question if the Fed will reduce its support for the economy, but rather when it will do so. And when it does, given the mechanics of the bond market and the precise nature of the central bank’s support over the past few months, mortgage rates will continue their ascent.

For you, the average Joe or Jane, the net result is simple: If you’ve been on the fence about buying a home, it’s probably as good of a time as any to make up your mind.

The article News Flash: Mortgage Rates Will Head Higher originally appeared on Fool.com and is written by John Maxfield.

John Maxfield has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo and owns shares of JPMorgan Chase and (NYSE:JPM) Wells Fargo.

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