How does the interest rate develop in January? Read our mortgage interest expectation. This month we see a slight correction down on the recent interest rate rise.
Mortgage interest rates increased further
At the end of 2016, mortgage rates rose for the first time in a long time. After the capital market interest rate rose in October and November, one lender after another decided to raise the mortgage interest rate. This market interest rate for bonds is an important indicator of long-term interest, for example the 20-year fixed-rate mortgage.
This rise in market interest rates is sometimes attributed to the ‘Trump effect’. However, the upward trend was already started earlier (October), among other things after positive economic reports and an expected rise in policy interest rates by the FED. The election of Trump as President of the United States, and in particular his promise for more domestic investment, did boost the capital market interest rate.
Mortgage interest rate expectation January 2017
At the end of December and the beginning of January, however, we see a slight correction on the sharp rise in capital market interest rates. The capital market interest rate fell slightly. This provides a mixed picture for the mortgage interest. While a number of lenders are still adjusting their rates to higher market rates.
Pressure on mortgage interest remains
The European Central Bank (ECB) still holds strong downward pressure on long-term interest rates by buying up bonds. The central bank has decided to continue the buy-back program after March, either in a weakened form. This prevents a rapid rise (or fall) in interest rates.
Economic growth can cause interest rates to rise in the long term. However, there are also many uncertainties. For example, the surprise of the outcome of the American elections and the Brexit referendum may have disappeared, the inauguration and withdrawal have yet to take place. Read more about the long-term mortgage interest rate development.
So it remains interesting to follow the development of the mortgage interest. You receive our interest rate updates and the monthly interest rate expectation in your mailbox.