Two Cents - Insights Brought to you by Vectra Bank

With Summer 2016 now well in the rearview mirror, some may be mourning the end of one of the best stretches to have been a U.S. homeowner in recent memory. For those who purchased a home during this time, historically low mortgage rates enabled them to save big. For those who already own or were looking to sell, the news may have been even better - home prices continued climbing as demand shot up around the country.

Analysts are still busy parsing the data on the 2016 homebuying season, but naturally, everyone is by now looking to Q4 and beyond. Although the next few months aren't typically met with blockbuster sales numbers, a few key economic events on the horizon, along with the conclusion of a tumultuous presidential campaign, have the potential to give homeowners a small glimpse into the future.

Where rates stand

The average mortgage rate experienced a relatively quiet third quarter after a couple months of volatility. According to Freddie Mac's Primary Mortgage Market Survey , interest rates on a standard 30-year fixed loan held steady throughout much of July and August before jumping up slightly in the middle of September. Still, the index closed out the month of October around 3.5 percent, well below the 3.91 percent seen a year before.

As Freddie Mac explained, rates took a downward turn and have stayed low since mid-June, when news of the United Kingdom's vote to leave the European Union embroiled the world's economy in uncertainty. As a result, the Federal Reserve decided not to raise its own target interest rate, allowing lenders to continue offering cheaper mortgages.

Following the Fed

Now, once again, the Fed is in the spotlight with the eyes of the entire financial world watching. But if you're an average consumer and couldn't say for sure what exactly the Fed is or why it's important, you wouldn't be alone. Although their job is complex, what these economic experts decide often has broad impacts on almost every aspect of life in the U.S., including how easy it is to get a job, a loan or any item you can purchase in a store.

That's because the Fed, as chaired by Janet Yellen, is in charge of the monetary policy of the U.S. That means this panel of experts decides the best way to make and spend money, both within the country and around the world. In the process, the Fed must adhere to its mandate to keep employment and wages high while keeping inflation and the prices of goods low.

With the economy showing signs of more robust growth, the chances of a December interest rate hike have increased. This will also lead to higher mortgage rates.

The Fed accomplishes much of this through its interest rate policies. The rate that everyone can't stop talking about is the federal funds rate, which it charges to other banks when it lends them money. Right now, that key rate is very low - only around 0.25 percent. The rate was even lower, near zero, from the end of the last housing crisis until December 2015. That was the longest the Fed had ever gone without raising this rate in its entire history.

Naturally, the big question revolves around when the Fed will raise the rate again. It had previously planned on several rate hikes throughout 2016, but continually sluggish growth made this untenable. On Sept. 21, the Fed committee released its first report on the economy since July to announce that it would wait to raise rates once again, but that the long-awaited hike would happen soon.

"The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives," the Fed said in a statement on the meeting.

If the Fed does decide to raise the target rate in December, as many analysts believe they will, it will likely mean more expensive mortgages for buyers. On the other hand, it should also raise interest gained from saving and investing, which would be a welcome sight for the typical American family.

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