Mortgage rates were hammered last week after Fed officially stopped buying mortgage backed securities. Fannie Mae 30 year (4.5%) mortgage bond opened the week at 100.44, was down 97 bps for the week as it closed at 99.47 (see chart below). The mortgage rates for most of the programs had jumped up by .25%. These are ominous signs.
If last week was any indication this is not going to be a slow rise in interest rates as a lot of experts had predicted.
From what we have seen so far we are definitely looking at mid -high 5s by the end of the year. For the real estate market that is still fragile, more than .5% increase in rates could come as a big blow.
If you were looking to buy a house and had a Pre-approval done, it may be a good idea to get it reviewed again by your lender. An already .25% increase in rate means that you may not qualify for the same amount of mortgage that you did 1 week back. And if you are looking to refinance, you opportunity to get a low rate may be limited.