Probably the most frequently asked question I get is, “Do you know where rates will be tomorrow?” This is one of the hardest questions to answer in today’s volatile market. In general, I don’t think it is worth the risk of gambling (“playing the market”) with your future home.
When you are purchasing a home you have certain time deadlines to meet, and mortgage rates can shoot up much faster than they go down. Is it really worth missing out on the home of your dreams to save 1/8th of a percent in rate?
The first few days of last week brought a 3 day rally, followed by Friday’s sell off where the Dow ended below the 10,000 barrier. There is no telling what this means for mortgage rates over the next few weeks. Is this another economic downturn, or is this just a minor hiccup in the path to recovery? While the experts agree that mortgage rates are inevitably going to rise (see my previous post on historic mortgage rates) rising clearly hasn’t been the trend since the Fed stopped buy mortgage backed securities (MBS) 2 months ago. While the US has produced what appears to be stabilizing housing numbers and the US economy appears to be growing at 3% (inflation adjusted) this quarter, the troubles overseas are what are making investors skittish. While this is bad for most retirement accounts and investment accounts, this is good news for mortgage rates. |
It is difficult and truthfully impossible to predict the future (if it were possible we could have avoided the devastating gulf oil spill). I think come today’s rate sheets mortgage rates will have surpassed the recent 50-year all time lows. Mortgage rates move up much faster than they move down... when things really get moving a jump of 200 bps overnight are not out of the question. A rate of 4.75% or for a 30 year fixed mortgage could easily turn into 5.25% or worse in a day.
We can all follow the markets very closely, but for the most part if things move fast, it will be a reactive decision vs. a proactive decision that could mean missing out on historic all time lows. Leave the gambling for Las Vegas and not on the home of your dreams.
We’ll see what the rest of the day and coming weeks bring!
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