Mortgage rates are poised to go up. You should lock your interest rate now.

Rates on home loans edged slightly upward in Bankrate’s weekly survey. They likely are headed even higher in coming weeks because it looks like the Federal Reserve will raise short-term interest rates this month. That’s sooner than many investors had expected, and it means that it’s better to shop for a mortgage now.

Signaling a Fed hike
The Federal Reserve likes to let markets know of impending rate moves because it wants to avoid destabilizing markets. Two Fed messengers went on TV Tuesday to alert investors that the next rate hike could come as soon as March 15.

William Dudley, president of the Federal Reserve Bank of New York, told CNN: “I think the case for monetary policy tightening has become a lot more compelling.” On CNBC, Dallas Fed president Robert Kaplan said the Fed should move “sooner rather than later.”

Before those comments, many investors expected the Fed to keep rates unchanged March 15 and to raise the federal funds rate at the next scheduled meeting, May 2 and 3. But after Dudley and Kaplan spoke, the probability of a March 15 rate hike rose above 65 percent — up from 35.4 percent a day earlier. That’s according to the CME Group’s FedWatch Tool, which figures the odds by analyzing the prices of futures contracts.

Source: Bankrate

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