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Mortgage rates just witnessed the worst week on record. During last 3 days, rates were changing on an hourly basis. Just when I thought I have seen it all, we get a week like this. Its a loan officer’s worst nightmare come true.
In last seven days I had already written two posts on mortgage rates. I had no plans of writing another till next week. But I couldn’t let a news like this go unreported.
Mortgage Backed Securities (MBS) that directly impacts the mortgage rates went down by a jaw dropping 314 basis points (bps) this week. A drop in the price of MBS means an increase in mortgage rates.
Most of the big banks are quoting an APR of around 4.8% on 30 Year Fixed conforming mortgages. These are loans with loan amount $417,000 or lower. In high cost areas like San Jose, CA where conforming loan balance is $625,500, the rates could be .125% to 0.25% higher. At Arcus Lending, our 30 Year Fixed rates are consistently better than big banks. Get a Live Quote here.
As I have mentioned several times on my blog posts and radio shows, this is not a time to play the market. If you get a rate that works for you, lock it immediately. It may not be available the next hour.
I personally think rates where they are still quite a deal. Don’t be surprised if we are talking 5% rate soon. And if Fed does decide to taper or stop bond buying (which I talk about in this post), even a 6% rate towards the end of the year won’t surprise me.
What should you do if you were thinking of refinancing – Chances are, your current rate is now better than the market rate. If you wasted last 3 days rate shopping – guess what? You are out of luck. You may still consider reducing the term or changing the loan program e.g. trying a 15 Year Fixed or moving to an Adjustable Rate Mortgage (ARM). In any case, if you can benefit from refinancing, lock the rate the soonest your lender would allow you to. We are able to lock rates with just a completed loan application.
What should you do if you were thinking of buying – With both home prices and mortgage rates going up, if there ever was a time to buy, it is now. Three months later, you will end up paying more for both the house and the mortgage payment.
What should you do if you were thinking of selling – If the rates rise to 5%-6% range, it would cut down on the buying power for a lot of potential buyers. That could could mean a smaller pool of qualified buyers, hence less offers and even less bidding wars. Worst case, the market could quickly change into a buyers market. Don’t wait to list your house if you were thinking of selling.
It’s a very volatile and rapidly moving market. Choose your options carefully. Take an expert advice. Else, you could end up losing a ton of money.
I am always available for a free consultation. Call me at 408.615.0655 or email me at [email protected]
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