So does the recent rise in mortgage rates have you thinking twice about buying or building a home? While I certainly understand that nobody want's to pay higher rates for their mortgage. The reality of life is with the recent trend in mortgage rates, it is clear that rates are only likely to go up with few stops along the way.
After the most recent week in the bond market many clients can start to see how mortgage rates can be just as unpredictable as gas prices. Like gas prices, mortgages rates move with the market. In the case of mortgage rates, the bond market. A good indicator of mortgage rates is to look at the US 10yr Treasury note. The chart below shows the last 6 months of 10yr Treasury pricing. If you look at the most recent 30 day period you see a clear strong move up in rates. This move represents nearly a full 1% increase in rates in just over a month!
So what is it that is driving the market to move rates so much higher in such a short period of time? The answer is many traders believe that the days of the easy and cheap government money that has flooded the market is coming to an end. Many fear that if the government does not continue it's low rate policy there will be a strong move up in rates.
It is important to remember that the market trades in anticipation of what it believes will happen. The market is anticipating the government ending it's easy and cheap money policy in exchange for higher rates. Should the government discontinue it's easy money policy and actually stop buying mortgage paper, we will likely see even higher rates.
The truth is nobody can predict rates. However, we can certainly look at trends and the most recent trend is a great incentive to move now while rates are still great and prices are still favorable. With improvements in the housing market and interest rates moving higher, many potential homebuyers are playing with fire if they decide to wait or postpone a home purchase. Not only do they risk the likelihood of higher rates, they also risk higher home prices.
If your in the market for a mortgage recognize the market determines rates and your lender cannot control the volatility in the market.
The name of the game in todays housing market is speed. With houses moving quickly and rates moving higher, be able to make decisions quickly and with the guidance of an expert Realtor and lender. Simply put, if you snooze, you will likely lose as higher rates and higher prices mean you will simply get less house for more money and nobody likes that.
If there has ever been a time when having experts work for you matters, it is now. If you need a great Realtor or builder in the Western Michigan area, let me know. I work with some of West Michigan's top agents and home builders and will be glad to get you connected with one.
Please don't hesitate to contact me if we can help.
Dan Moralez
616-931-4629
www.danmoralez.com
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