In our earlier blog post Look to Rising Mortgage Rates, we mentioned there was evidence of a rate increase trend going to occur. Rates from the 30-year mortgage fixed rate were rising to above 3.5% and applications for mortgages were starting to decline. Now three months later we are seeing definite proof of this and mortgage rates are climbing above the 4% mark for the first time since May of 2011. The window of opportunity to lock in on a historic low point is closing, so if you are on the fence about refinancing or purchasing there is not much time to waste anymore.
With mortgage rates now shooting to their highest point in over a year the question turns to what is changing and how it is affecting the housing market. The 10-Year Treasury Rate is a very important indicator, as it is what dictates the 30-Year Fixed Rate Mortgage Rate. Treasury yields are determined by supply and demand, and the lower the demand the higher the yields increase. Higher treasury yields directly correlate to higher mortgage rates, which can affect the purchasing power of a buyer. Recently, these Treasury yields have gone up from 1.9% to over 2.15% in a very short period of time. Although this might not seem like a large jump, mortgage rates are typically 2% higher than that treasury yield number.
Demand for Treasury bonds have been kept low thanks to the Federal Reserve and their purchasing of up to $85 billion a month in bonds and mortgage-backed securities. However, the Fed has announced that they are going to decrease their purchase activity which means that lenders won’t be able to sell mortgages at low rates anymore. The timeframe for which they are backing away is shrinking, initially projected at late 2013 but now moving down to September or sooner. Private investors will have to step in where the Fed left and they will raise rates in order to see a better return on their investments. To put this in perspective, rates will likely move closer to the 5.23% mark, which was a 37 year low point back in 2003.
Since we know all these signs point to rising interest rates, now is the time to lock in a rate whether you are looking to purchase or refinance. If refinancing has been on your get it done list act on it quickly before it isn’t worth your time. Rates may not be at rock bottom anymore but they are still at historic low points. In order to find out more about what mortgage rates we can get for you please fill out the loan application to have a qualified consultant contact you. Integrity Financial loan specialists can give you all of the facts about the mortgage options you qualify for and help you through your buying process. Give us a call today at 1-877-760-9854 to find out more information.