Mortgage Rates Volatility And How It Affects Refinancing

Gustan Cho Associates are mortgage brokers licensed in 48 states

This article on Mortgage Rates Volatility And How It Affects Refinancing

Mortgage Rates Volatility Concerns:

Mortgage Rates Volatility is a major concern for homeowners who are planning on refinancing or those who are in the refinance mortgage process.

  • Loan Officers should pay attention to locking mortgage rates before it is too late
  • Mortgage Rates can go up and down
  • However, if rates go up and do not make a correction, the refinance process is pretty much over
  • The time and cost of the appraisal can go down the drain if homeowners who are refinancing already ordered a home appraisal and did not lock their rates

Mortgage-Backed Securities

Mortgage-Backed Securities

Mortgage-backed securities tumbled again on Friday causing turmoil in the mortgage markets.

  • The mortgage-backed securities market tanked by more than 200 basis points which marked the steepest one day drop in recent mortgage back securities history
  • Mortgage Rates have never been so volatile

Mortgage Backed Securities Versus Mortgage Rates Volatility

When mortgage-backed securities drop and with mortgage rates volatility, mortgage rates rise.

  • Friday marked the biggest rise in mortgage rates in a single day
  • We have witnessed the biggest single-day mortgage rates increase in a single day in history
  • Mortgage rates have seen the sharpest increase in history in the past several weeks
  • Even with the holiday week, mortgage-backed securities plummeted 255 basis points
  • The previous two weeks, mortgage-backed securities dropped 314 basis points
  • Mortgage rates have risen 0.5% the past few weeks on almost all mortgage loan programs. 
  • Mortgage rates have risen for the 9th consecutive week

Better Than Expected Employment Report Adds Fuel To The Fire

Friday’s employment report came in better than expected which plummeted mortgage-backed securities.

  • This rallied the stock market and it was great news for the economy but the end result was mortgage rates rising
  • Labor analyst forecast 160,000 new jobs in June but records show that 195,000 jobs were added. 
  • Revisions of past months added an additional 70,000 jobs
  • However, the unemployment rate remained at a constant of 7.6%

Highest Mortgage Rates Volatility Since The Great Recession

Highest Mortgage Rates Volatility Since The Great Recession

The majority of the major banks were quoting mortgage rates just under the 5.0% mark for conventional conforming mortgage loans.

  • FHA mortgage rates were at 4.3875%
  • Just a little over a month ago, FHA mortgage rates for a 30 year fixed rate mortgage was 3.25%

Get Re-Qualified For Mortgage If Pre-Approval Is More Than Several Weeks Old

Mortgage Borrowers who have been pre-approved for a mortgage loan and need to go back to mortgage loan originator and get pre-qualified for a mortgage loan if mortgage rates are substantially higher.

  • Chances are borrowers will no longer be pre-qualified for the mortgage loan amount loan officer first quoted due to the rise in mortgage rates.
  • Higher mortgage rates mean higher monthly payments which affect debt to income ratios.

Borrowers who need to get qualified for a mortgage at today’s volatile mortgage rates, please contact The Gustan Cho Team at 1-262-716-8151 or text us for faster response. Or email us at [email protected] We are available 7 days a week, evenings, weekends, and holidays.

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