Fence sitters may be dealing with an opportunity lost by trying to time the market in hopes of a "better deal". The following demonstrates that which we have been saying for months.
As the pressure for higher mortgage rates has increased in recent weeks, investors have speculated that the Fed would step in to "defend" certain interest rate levels, but that hasn't happened. This week, Fed officials explained that their mortgage-backed securities (MBS) purchases are designed to support the mortgage market and not to set rates. The Fed's MBS purchases of $25.5 billion this week were similar to levels seen in recent weeks. Disappointed that the Fed hasn't increased its quantity of asset purchases, investors sold MBS this week, and mortgage rates moved higher.
A number of factors have been developing which typically push interest rates higher. The coming supply of debt needed to pay for government programs will compete for investor funds. Despite strong demand for this week's large Treasury auctions, investors are concerned that higher rates will be required in the future. In addition, an improved economic outlook has made investors more willing to move funds to riskier assets and away from safer assets such as bonds. It also means that higher inflation may be a concern sooner than previously expected.
Info courtesy of Jeff Cook, Bradford Mortgage Company.
This afternoon investors decided the selloff of MBS was overdone and favorable re-pricing took place.
Rates are still EXCELLENT!
Here's a sample of Primary Home Purchase money rates today, up to 0+1, with escrows for a borrower with median credit of 720-760. These are subject to vary based on loan amount, occupancy, LTV, credit quality and other factors.
Conforming (using 250K as amt)
30 yr fixed 4.875%
15 yr fixed 4.5%
5/1 ARM, 30 yr am 4.00%
Jumbo (using 650K as amt)
30 yr fixed 6.00%
15 yr fixed 5.00%
5/1 ARM, 30yr am 4.375%
Super Jumbo (using 1M amt)
30 yr fixed 6.125%
15 yr fixed 5.00%
5/1 ARM, 30 yr am 4.375%
Complements of Ashleigh Sumlin, Bradford Mortgage Company, 704-307-9908