Any hinting from the European Central Bank about raising their benchmark will have a significant impact on our mortgage bonds as well. It will strengthen the Euro versus the dollar, which is bad for rates in and of itself because it means there will be pressure from our central bank to raise rates to keep our treasury yields competitive.
It will also cause a spike in dollar denominated oil prices, which is bad for interest rates, from a borrower's standpoint, due to the inflationary pressures of high priced oil. Back in 2008 when oil was reaching all time highs in the summer, we saw a short term spike in rates that represents the last time the average mortgage rates were in the 6% range. See the MBA chart 1991-present at Mortgage News Daily.
Our bias is firmly toward locking in an interest rate on refinance transactions and redoubling efforts and time spent looking at homes for potential home buyers. This is especially true for clients using an FHA loan for financing because after April 18th, mortgage insurance will increase by .25%, which is the same as if the interest rate were to increase .25%.
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