The general rule of thumb when watching mortgage interest rates is as follows –
Good news for the economy causes the stock market to rise and interest rates to rise.
In the most simplistic of analogies - Bad news for the economy causes investors to pull money out of the stock market and into the safe haven of treasuries, causing mortgage interest rates to fall.
This is how it always used to be. In this economic climate no rules seem to apply but trends still remain typically somewhat the same. The stock market rally of the past few weeks has caused rates to increase. Loan level price hits for cash out, high loan to value, lower credit scores and other factors have moved some borrowers qualifying rates from the 4’s to the 5’s this past week. The lower rates are still available but they now come with a steeper cost in the form of discount points.
Earnings reports are expected out on Wall St soon. Many suggest the recent stock market rally was just mere profit taking. Others are calling for another huge drop in the stock market. Using the theory above, this could mean interest rates may possibly drop again. We have witnessed three or four rate drops in the past few months. Every rate dropped stopped at the same level. If you have been sitting on the sidelines waiting for rates to return to the level of recent weeks, pull the trigger when they return and stop speculating on further declines. I have had way too many clients who waited too long only to have rates return to the lower levels and were not ready to make a move.
Timing is Everything!
Maryland Mortgage Rates
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