Mortgage Rates Bounce Off All-Time Lows; The Start Of A Trend?

By
Mortgage and Lending with Platinum Funding Group, Inc.NMLS-243033 NMLS 4195

 

Freddie Mac Weekly Rates

Low mortgage rates are terrific — if you can get them.

One week after posting its lowest mortgage rate in 50 years, Freddie Mac reports that the 30-year fixed rate mortgage rose by an average of 7 basis points nationwide this week to 4.22%. To get the rate, you’ll pay an average of 0.7 “points”.

This week’s rise in the 30-year fixed rate mortgage pulled rates off their all-time lows so either you locked last week’s rock-bottom rates, or you missed it.

Mortgage rates are rising.

As a refinancing homeowner or home buyer in Irvine , rising mortgage rates are something to watch. This is because, as mortgage rates rise, so do the long-term interest costs of giving a mortgage, increasing your homeownership costs.

For example, if you failed to lock a rate last week when rates were bottomed, and then decided to lock-in only after rates had climbed 0.25 percent, at the new, higher rate, over the life of your loan, you would have responsibility for an extra $5,300 in interest costs for every $100,000 you borrowed.

Rising mortgage rates can be expensive.

For home buyers, rising mortgage rates pose a second problem — they erode your purchasing power. A home that fits your budget at today’s rates may not fit your budget at next week’s rates. And because mortgage rates change quickly, you can sometimes feel ilke you’re racing the clock.

The hard part about mortgage rates, though, is that we can never know what they’ll do next. On some days they rise, on some days they fall, and on some days they stay the same. Instead of trying to “time the bottom”, therefore, a good strategy can be to lock the first, low rate that fits your budget. Then, if rates are lower in the future, you can look to refinance at that time.

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Rainmaker
707,966
Elite Home Sales Team
Keller Williams Realty - San Clemente, CA
A Tenacious and Skilled Real Estate Team

That is a large bounce I hope it is not a trend.  We will have to see.

Aug 27, 2011 02:30 AM #1
Rainer
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Kym Wright
Prudential California Realty - Olivenhain, CA

As much as I hate to see the bounce, sometimes it does shake the people that are "on the fence" off!  It takes these market fluctuations to get them to get serious.  I hope though it is not a long term trend.  It is hard enough to get clients to qualify!

Aug 27, 2011 02:33 AM #2
Rainmaker
178,869
James Muhammad
Keller Williams Realty - Rancho Cucamonga, CA

We need rates to stay as low as possible.  The article is great information and we will see how it goes.

Aug 27, 2011 02:34 AM #3
Rainmaker
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JodiAnn Garone
Cataneo & Associates - Holmdel, NJ
You'll feel right at home with me!

Tiffany,

What a fantasic post to share, Thank you.... this is exactly what I have been expressing to my buyer clients for some time now. Sitting around waiting for price to drop even lower then what the current market value can sometimes cost you. Let's hope that more buyers realize that now is the time to buy :)  Have a great day!

Aug 27, 2011 04:53 AM #4
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David

Great analysis.  In mid-March you would have written the same words and would have been incorrect.  The trend is your friend as those who follow the markets for years like to say, and an uptick in an otherwise obvious downtrend in interest rates (see your graph), would indicate that mortgage rates have further to fall.  Taking advice from someone who makes a living selling mortgages is like taking advice from a car dealership as to whether or not you should buy one of their cars.


Time will tell who is correct.

Aug 27, 2011 10:40 PM #5
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Rainmaker
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Tiffany Taylor

Platinum Funding Group
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