First Time Homebuyers – Tick Tock

The steady march towards “normal rates” continues.   We had yesterday’s release of the Federal Reserve minutes from the January meeting as highly influential to mortgage rates.

They were indeed influential, pushing rates to their highest levels of the year for most first time home buyer loans.   The notable exception was the state programs as those are not typically driven by market fluctuation.

The FOMC minutes point towards a healthier economy that is on its way towards recovery.  That is such welcome news, but means that today’s affordability for first time buyers will be ending.  Four big points drove rates higher yesterday:

1. Re-affirmation that the Fed will no longer be supporting mortgage rates as of March 31
2. The Fed Funds Rate will be rising as the Fed attempts to tighten their  policies
3. Consumer spending is recovering
4. The big one–”higher medium-term inflation.”   Mortgage rates rise when inflation rises.

Overall, the Fed is optimistic and with good cause.  Stronger economies lead to job growth and that is welcome.

If you’re safe in your job and trying to time a first time home purchase, don’t wait.  All of the same signs that point towards higher mortgage rates also point towards higher home prices.