Rates A-Risin

Rates have bulked up considerably this week. .25% to .50% depending upon the term and LTV.

There are a number of factors causing this, but the main culprits are the treasury yields and mortgage spread premium. The 10-year trasury yield has gone up almost one quarter percent in one week. Money has been moving out of bonds and into the stock market on the risk side and other higher yielding investments on the safe side. Lately, the drop in oil has spurred the activity out of bonds.

You might ask yourself... Self, why have 30-year fixed rates gone up one-half percent when the treasury yield only went up one quarter percent?

Well, the mortgage spread premium that mortgage buying investors and banks has gone up once again. Perceived mortgage investor risk has heightened with the Fannie and Freddie bail-out news. There are more and more lenders pulling out of the mortgage market. Less competition equals higher mortgage rates when demand is less than stellar.

You might consider locking a rate if you are refinancing and have a beneficial program option. Mortgage rates are still in a low range historically, but that could change and quickly. Better to lock a sure thing low rate than to sit on the fence and let your benefits rise away into the sunset.

I've experienced too many people talk themselves out of locking superior rates this year, waiting for lower and lower rates. So many have been burned by the hesitation this year. Hey, rates could go down from here, but the odds of a substantial rate reduction in the cuurent financial environment is very slim. The odds of mortgage rates rising even into the 8% range is not out of the question. Important thing to keep in mind if you are currently shopping mortgage rates.

May the Mortgage Rates be with You!

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