Prospect of Fed Rate Hikes Heats Up Mortgage Market

Investing.com - Mortgage rates haven't moved much this year but expectations of Federal Reserve interest rate hikes are prompting homebuyers to lock in loans.Mortgage applications have posted solid gains in the past two weeks, according to an industry trade group.Even though mortgage rates are still relatively low on a historical basis, analysts say consumers often make decisions in anticipation of future rate increases.The Federal Reserve is expected to raise official interest rates two to three times this year, continuing a cycle that started in 2015. Over the past 12 months, the rate on a 30 year mortgage averaged 4.14%, but recently touched its highest level since March of last year.Rates are expected to peak between 4.5% and 4.7% in 2018. The high end would be the highest in seven years.Higher borrowing costs may discourage some potential buyers, who already face rising prices because of the relatively low supply of homes.