Mortgage Rates Here & Now

When trying to understand what in the world is going on with mortgage interest rates and why the market is so volatile, we have to look back to last summer.  In late May through early June, Mortgage Backed Security (MBS) prices (that which moves mortgage interest rates) fell a whopping 650 basis points (bp), then over the next month prices went straight up and rose an enormous 460bp, followed by prices giving up 230bp in only a few short days. These three enormous price swings happened in less than two months.  

A key variable that existed then was during that time period, the Fed was committing $100B a month to Mortgage Backed Security buying, But this time around, the Fed is NOT buying Mortgage Backed Securities.  And, thus, there are bigger swings in the market that directly affect mortgage rates and our bike no longer has training wheels.

   A couple key points

- The Fed still is trying to push up Stock prices and create inflation and the deficit is still growing.

- The latest economic reports show the economy is still improving. 

- The headwinds against meaningful long-lasting improvement still remain.

- Inflation is the arch enemy of mortgage interest rates and with this concerted effort by the Fed to create inflation, today's interest rates will not last. 

If you've ever shouted from the rooftops to friends, family and clients, that time is now.  Yesterday's rates are just that - yesterday's rates.  Expect that we will not get back to them.  Though volatile, today's mortgage rate enviroment is still very low, historically speaking and the affordability of homes today will not last.  We have a perfect storm of an opportunity with every home on red-tag sale compared to years past and interest rates are still in the all-time-low range.