Mortgage Rates Push Through Key Resistance Level
Mortgage rates climbed significantly this week due mainly to the threat of inflation and credit quality. The mortgage rate movement is reflecting increased concerns about what the Federal Reserve might do to battle inflation. Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.32 percent this week, the highest level in nearly eight months and up sharply from 6.09 percent last week.
The housing picture is adding to mortgage rates now as foreclosure filings continue to increase. Foreclosure filings last month were up nearly 50 percent compared with a year earlier. Nationwide, 261,255 homes received at least one foreclosure-related filing in May, up 48 percent from 176,137 in the same month last year and up 7 percent from April, foreclosure listing service RealtyTrac Inc. said Friday.
This is the first time in 2008 that 30-year fixed mortgage rates have pushed through the 6.25% resistance level, which is corresponding directly with the 10-year treasury yield, which has clearly broke it’s resistance level of 4.0%. Until this week, we have enjoyed a nice roller coaster ride up and down between 5.75% and 6.25% par mortgage rates on 30-year fixed mortgages.
Shorter term rates and adjustable mortgages have fared worse than fixed-rate mortgages on a percentage basis, as the shorter term bond yields have increased at a higher percentage than the longer term bond yields
Where do we go from here? Many feel that mortgage rates will continue to rise. There are still no compelling reasons for investors and lenders to dive into the mortgage market, which will the mortgage premiums on the high end. The argument is that the continued threat of inflation will continue the rise in bond yields and mortgage rates.
If you are sitting on the fence and waiting for lower rates to refinance, it could be a long wait. I had more than a few clients that waited for lower rates when the par 30-year fixed mortgage rates were at 5.75%! I advised them all to jump and lock the rate, but the gambling mentality prevailed. They lost out on some significant financial benefit, and I would guess they are kicking themselves now.
Mortgage rates are still very good for now, and I would still suggest locking a rate now if it produces a sound financial benefit, depending upon the individual’s specific situation. For excellent credit scores and 80% LTV or lower home loans, conventional refinance programs are the way to go. For poor to good credit and higher LTV home loans, I suggest checking out a FHA refinance.
More times than not, those who seek to hit any market bottom, whether it be stocks or mortgage rates, will end up on the short end of the stick. It is best to get off the fence when the time is appropriate and not worry about catching the absolute lowest mortgage rate of the century.
May the Mortgage Rates be with You!
Refinance Tool Box
The housing picture is adding to mortgage rates now as foreclosure filings continue to increase. Foreclosure filings last month were up nearly 50 percent compared with a year earlier. Nationwide, 261,255 homes received at least one foreclosure-related filing in May, up 48 percent from 176,137 in the same month last year and up 7 percent from April, foreclosure listing service RealtyTrac Inc. said Friday.
This is the first time in 2008 that 30-year fixed mortgage rates have pushed through the 6.25% resistance level, which is corresponding directly with the 10-year treasury yield, which has clearly broke it’s resistance level of 4.0%. Until this week, we have enjoyed a nice roller coaster ride up and down between 5.75% and 6.25% par mortgage rates on 30-year fixed mortgages.
Shorter term rates and adjustable mortgages have fared worse than fixed-rate mortgages on a percentage basis, as the shorter term bond yields have increased at a higher percentage than the longer term bond yields
Where do we go from here? Many feel that mortgage rates will continue to rise. There are still no compelling reasons for investors and lenders to dive into the mortgage market, which will the mortgage premiums on the high end. The argument is that the continued threat of inflation will continue the rise in bond yields and mortgage rates.
If you are sitting on the fence and waiting for lower rates to refinance, it could be a long wait. I had more than a few clients that waited for lower rates when the par 30-year fixed mortgage rates were at 5.75%! I advised them all to jump and lock the rate, but the gambling mentality prevailed. They lost out on some significant financial benefit, and I would guess they are kicking themselves now.
Mortgage rates are still very good for now, and I would still suggest locking a rate now if it produces a sound financial benefit, depending upon the individual’s specific situation. For excellent credit scores and 80% LTV or lower home loans, conventional refinance programs are the way to go. For poor to good credit and higher LTV home loans, I suggest checking out a FHA refinance.
More times than not, those who seek to hit any market bottom, whether it be stocks or mortgage rates, will end up on the short end of the stick. It is best to get off the fence when the time is appropriate and not worry about catching the absolute lowest mortgage rate of the century.
May the Mortgage Rates be with You!
Refinance Tool Box
posted by Jim Bisnett at
1:51 PM
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