Refinance Rates Nudging Upward for Week

Refinance rates have increased steadily over the past week by an average of about one quarter point. The stock market chaos has sent the 10-year treasury yield up and down like a yo-yo, but the real driving force behind rates as of late continues to be the mortgage spread risk premium.

Refinance lenders are becoming tighter and tighter with their cash and are bumping up the mortgage interest rates to account for the risk.

Again, most of the lender risk is derived from housing values. The goverment bailouts of financial institutions for bad debts and the direct cash infusion for banks will not do anything to lower the spread premium though, not until home prices stabilize.

In my opinion, the government should be focusing on real measures to help people to retain their homes and also get people purchasing homes. Yes, mortgage application guidelines should be met, but we need a stimulus to get homebuyers buying. Downpayment assistance, lowered rates, something with teeth that will actually jumpstart the home buying. My guess is that we may hear of some goverment action in this area, but hopefully the sooner than later.

May the Mortgage Rates be with You!

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