Mortgage Rates Increase Again
Are Days Of Low Mortgage Rates Over: Mortgage Rates Increase Again
Mortgage Rates Increase again last week to set the worst mortgage rates rise on record. Mortgage Rates were fluctuating hourly last week.
MBS, mortgage backed securities, plummeted 314 basis points. Mortgage backed securities is what drives mortgage rates up or down. If mortgage backed securities drop, Mortgage Rates increase.
Majority of banks are now quoting conventional mortgage rates of 4.75% or more. Not too long ago conventional mortgage rates were at 3.5%. Jumbo mortgage rates are in the 5.0% and some mortgage bankers are quoting jumbo mortgage rates north of 6.0%.
Locking Mortgage Rates Before Mortgage Rates Increase Again
Many mortgage loan borrowers have been floating their mortgage rates hoping it will drop. For the past 7 weeks, there was no correction and most of them now are contemplating locking their mortgage rates. Borrowers who had borderline high debt to income ratio mortgage loans are no longer qualified for their mortgages unless they pay points for lower mortgage rates.
Federal Reserve Board Chairman Ben Bernake
Federal Reserve Board Chairman Ben Bernanke thinks that the economy is recovering and is doing well. He is thinking of stopping buying bonds. Several market analysts are predicting mortage rates in the 7.0% range by the end of the year. Could it be possible? Absolutely. As discussed earlier, some mortgage bankers already have conventional mortgage rates in the 5.0% range and jumbo mortgage loans north of 6.0%.
Home Prices Rise Despite Mortgage Rates Increase
Home prices have been going up as well. With mortgage rates spiraling out of control, maybe this might slow down home sales. Personally, I think that the economy is far away from a recovery. Ben Bernanke could be making a major mistake in thinking that the economy is in good shape and that an interest rate hike is good for the economy. Look around you. Do you feel the economy has recovered?
Mortgage Rates Increase Means Less Buying Power
If mortgage rates rise over 6%, this would mean less buying power for home buyers. This could mean less buyers who are qualified for homes and less competition in the market place due to more inventory.
You will probably see many fluctuations in the real estate market. Nobody has a crystal ball but history has proven itself that when something rises rapidly in a very short period of time, it also corrects itself. This has proven itself in both the stock market and bond markets.