Featured, Money Matters, Mortgage, Tips and Tricks

What Happened to the Interest RATES????

If any buyer has checked into interest rates since Wednesday they have probably noticed an increase. Rates can change daily or even multiple times a day depending on current market conditions. Rates change without notice. We saw mortgage rates move from 4.75% up to 5.5% in one day. So many ask…..why???

The main culprit for the rate increase was the sell off Treasury bonds. The treasury has literally been printing money by way of Treasury auctions to pay for the massive spending. And these hundreds of Billions of dollars of new Bond supply have to be absorbed by the market, so the additional supply literally weighs on the entire bond market and drags prices lower, which makes rates increase!

After losing a staggering 363 basis points since last Thursday, Mortgage Bonds are bouncing higher today. But the question on everyone’s mind…will rates come back? The answer is that we will probably see some improvement, but it will be difficult to see rates fight back to the levels they were at just last week.

Oil continues to gush higher hitting nearly $67 a barrel this morning. A direct result of a weakening US Dollar, caused by concerns over the massive debt being issued. This is going to cause prices to rise at the pump and unfortunately weigh on the consumer further during a time when we need consumer spending to pick up and help revive the economy.

I am asked daily by homebuyers that are already in a contract whether they should lock or float? Rates are still at historic lows. It is a buyers personal choice since I cannot predict when the rates will rise or fall but I think a lot of homebuyers have learned that sometimes you can get too greedy when waiting for rates to drop just so you can get a .25% lower in interest rate because rates as shown this week do go up a lot quicker than they come down!

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