Mortgage Rates Rise with Drop in 10-Year Treasury Price
For the better part of 2009, mortgage refinance rates have held their own, almost amazingly for 5 months, but the recent surge in the 10-Year Treasury Yield has caused rates to rise by almost one-half point over the past couple of weeks.
The closing treasury yield on May 1 was 3.174 percent, while the close yesterday stood at 3.858 percent for a total change to the upside of .684 percent for the period. This increase in yield (which is opposite to the bond price) pretty much accounts for the increase to mortgage rates currently being offered.
The national average 30 Year Fixed mortgage rate for borrowers with excellent credit and financing 80 percent or less of the value of their home currently sits at about 5.5 percent.
Remember what I said earlier this year, when the national average rate was below 5.0 percent? I will not say “I told you so”, really…. But, there were many borrowers that refused to lock back then, when the getting was good. The typical “fence-sitting” posture assumed that rates would go down even further. Now, those same refinancing homeowners are either locking at higher rates, in a panic, while there is still significant benefit available, or kicking themselves for not locking sooner. It can be a real stomach turner, when you miss out on a great opportunity.
To those that missed out on the lowest rates of the year, I say, Forget About It! You are not alone, as a good number of refinancing homeowners will typically wait for the lowest mortgage rate offer that never comes.
Now lets go to a reality check timeout. Current Mortgage rates are still an awesome deal for a good portion of US homeowners. Particularly if you are looking to consolidate debt, get out of an adjustable rate mortgage, or maybe want to combine your first and second mortgage into one fixed home loan.
So, where will mortgage rates go from here? I don’t know, and nobody can tell you with any degree of accuracy because there are just too many variables involved, particularly in our current volatile economic climate.
What I can do is relay some pivotal variables to be on the lookout for, pertaining to the direction of mortgage rates.
On the mortgage rate increase side. Continued increases in supply to US bond debt (and ensuing threat of inflation) will cause the treasury yields to increase. The continued threat of major bank implosions will continue the stranglehold on investment capital and hurt interest rates. Continued downside pressure in home pricing threaten rates. Home foreclosure numbers that continue to rise is a major concern. Unemployment rates that reach over 10 percent will help to put pressure on mortgage rates.
On the mortgage rate decrease side. Home value stabilization, better employment numbers, stabilized foreclosure numbers, increased pending home sales and new construction starts, an adopted measure for valuing bank toxic assets, demand in long term US treasuries, and stronger bank balance sheets will all have a positive effect on current mortgage rates. Also, don’t forget the power of the US government to save the day again with some more money thrown at mortgage-backed securities and/or a Fannie/Freddie loan program offering that really helps people to get into a new home with lesser credit score and out-of-pocket money restrictions.
Now, the previously mentioned factors are just some of the major variables, but there are many others, which I hope will let you cut me some slack when I say that I don’t know where mortgage rates are going.
All I do know, is that the risk to rates moving to the upside is much greater than the move they will make to the downside. That is all the more reason to weigh your options carefully when deciding to wait on a current rate lock that is providing you with significant benefit, in hopes that you might be able to get in at a lower rate. Many have been financially hurt with that mindset in the current refinancing mortgage market.
If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.
May the Mortgage Refinance Rates be with You!
Refinance Tool Box
The closing treasury yield on May 1 was 3.174 percent, while the close yesterday stood at 3.858 percent for a total change to the upside of .684 percent for the period. This increase in yield (which is opposite to the bond price) pretty much accounts for the increase to mortgage rates currently being offered.
The national average 30 Year Fixed mortgage rate for borrowers with excellent credit and financing 80 percent or less of the value of their home currently sits at about 5.5 percent.
Remember what I said earlier this year, when the national average rate was below 5.0 percent? I will not say “I told you so”, really…. But, there were many borrowers that refused to lock back then, when the getting was good. The typical “fence-sitting” posture assumed that rates would go down even further. Now, those same refinancing homeowners are either locking at higher rates, in a panic, while there is still significant benefit available, or kicking themselves for not locking sooner. It can be a real stomach turner, when you miss out on a great opportunity.
To those that missed out on the lowest rates of the year, I say, Forget About It! You are not alone, as a good number of refinancing homeowners will typically wait for the lowest mortgage rate offer that never comes.
Now lets go to a reality check timeout. Current Mortgage rates are still an awesome deal for a good portion of US homeowners. Particularly if you are looking to consolidate debt, get out of an adjustable rate mortgage, or maybe want to combine your first and second mortgage into one fixed home loan.
So, where will mortgage rates go from here? I don’t know, and nobody can tell you with any degree of accuracy because there are just too many variables involved, particularly in our current volatile economic climate.
What I can do is relay some pivotal variables to be on the lookout for, pertaining to the direction of mortgage rates.
On the mortgage rate increase side. Continued increases in supply to US bond debt (and ensuing threat of inflation) will cause the treasury yields to increase. The continued threat of major bank implosions will continue the stranglehold on investment capital and hurt interest rates. Continued downside pressure in home pricing threaten rates. Home foreclosure numbers that continue to rise is a major concern. Unemployment rates that reach over 10 percent will help to put pressure on mortgage rates.
On the mortgage rate decrease side. Home value stabilization, better employment numbers, stabilized foreclosure numbers, increased pending home sales and new construction starts, an adopted measure for valuing bank toxic assets, demand in long term US treasuries, and stronger bank balance sheets will all have a positive effect on current mortgage rates. Also, don’t forget the power of the US government to save the day again with some more money thrown at mortgage-backed securities and/or a Fannie/Freddie loan program offering that really helps people to get into a new home with lesser credit score and out-of-pocket money restrictions.
Now, the previously mentioned factors are just some of the major variables, but there are many others, which I hope will let you cut me some slack when I say that I don’t know where mortgage rates are going.
All I do know, is that the risk to rates moving to the upside is much greater than the move they will make to the downside. That is all the more reason to weigh your options carefully when deciding to wait on a current rate lock that is providing you with significant benefit, in hopes that you might be able to get in at a lower rate. Many have been financially hurt with that mindset in the current refinancing mortgage market.
If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.
May the Mortgage Refinance Rates be with You!
Refinance Tool Box
Labels: business, economy, finance, home loans, money, mortgage rates, refinance, refinance rates, refinancing
posted by Jim Bisnett at
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