Mortgage markets finished the week unchanged last week but don’t let that make you think the markets were flat. It was a rough five days and rates
were up and down. Later in the week, Friday, was the toughest. An all-day deterioration, sparked by better-than-expected housing data, caused mortgage rates to tack on a quarter-percent by the noon hour and markets never recovered. Rates closed out at their worst/highest levels of the week and the unfavorable momentum figures to carry into this week’s trading, too.
There are two major reasons why rates could rise higher this week:
1. Fed Chairman Bernanke said Friday that the near-term growth prospects “appear good”. Comments like this draw money from bond issues to the stock market — a move that’s bad for rates.
2. Crude oil hit a 10 month high, a potentially inflationary development. During high Inflation, mortgage rates trend higher higher. During Jimmy Carter’s presidency, inflation was at one of its highest points in American peacetime history. This lead a spike in interest rates to 18% plus. Great if you were hording cash in money market accounts, but terrible if you were trying to buy real estate.
Furthermore, rate shoppers should take note that this week will feature the release of two key housing reports — the Case-Shiller Index (Tuesday) and the New Homes Sales report (Wednesday). Both have handily beat expectations in recent months and should that trend continue, mortgage rates would likely rise because of renewed economic optimism.
What’s good for the economy, lately, has tended to be bad for rates. Whether you’re shopping for a new home or looking to refinance an existing one, be wary of the ever-changing mortgage market. Rates move quickly and without warning. However, they tend to rise faster than they fall.
Today’s average 30 Yr Fixed Rate is 5.25%
15 Yr fixed Rate is 4.75%,
5 Yr Arm is 4%
7 Yr Arm is 4.5%
10 Yr Arm is 4.875%
We highly recommend Jesse as a great resource for mortgages in and around Boston.
JESSE KENNER CMPS