When the bond yield curve had inverted in late August, the USA began to harbor recessionary fears. These fears have since diluted; a trend reflected by a slight increase in the mortgage rates over the last couple of months. America’s manufacturing sector is still under the pump and this creates an atmosphere of economic weakness. At such times, investors may rush for bonds thereby decreasing bond yields and bringing down interest rate along with it. Of course, if it turns out this way, mortgage shoppers will feel a little more confident about their purchasing powers.
Mortgage Rates: rates increase across the platform
This week’s Mortgage Banking Associations’ (MBA) weekly rate survey reveals an increase in mortgage rate across the board.
According to the MBA Weekly Survey: “The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 4.03 percent from 3.98 percent, with points decreasing to 0.31 from 0.37 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.”
1 point in cost = 1% of the loan amount
“The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) increased to 3.98 percent from 3.97 percent, with points decreasing to 0.22 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.”
“The average contract interest rate for 15-year fixed-rate mortgages increased to 3.43 percent from 3.38 percent, with points decreasing to 0.28 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.”
“The average contract interest rate for 5/1 ARMs decreased to 3.40 percent from 3.43 percent, with points decreasing to 0.17 from 0.21 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. ”
Mortgage Rate Activity and Predictions
The Bankrate’s weekly survey of mortgage and economic experts, countrywide, reveals that there are very few takers for a rate hike for the coming week (14th November to 20th November).
Out of those surveyed, 11% predict a rate hike while 33% foresee a decline in rates. The remaining 56% believe rates will remain unchanged (with a maximum movement of two basis points either side).
Freddie Mac’s weekly mortgage survey has reported that the conforming rates for the week- 7th November to 13th November- have shot up, the uptick being 0.07% for 15 Y fixed and 0.06% for 30Y fixed.
Freddie Mac’s weekly mortgage survey noted, “The modest uptick in mortgage rates over the last two months reflects declining recession fears and a more sanguine outlook for the global economy. Due to the improved economic outlook, purchase mortgage applications rose fifteen percent over the same week a year ago, the second-highest weekly increase in the last two years. Given the important role residential real estate plays in the economy, the steady improvement of the housing market is a reassuring sign that the economy is on the solid ground heading into next year. ”
Mortgage Rate Lock Advice
I would recommend you to Lock if you are closing within the next 4 weeks and Float if you are closing beyond the 4-week frame.