Well it does get a few mentions but not like I thought it would. As we might or might not know, the Fed is going to stop buying mortgage backed securities at the end of March. They could extend that date but most likely they will not. What does this mean? Well it means that the really great rates we have enjoyed for quite some time now will most likely be rising. The current conventional 30 yr fixed rate is in the high 4's depending on credit score, and other loan adjustments. Let's just say it is a great rate right now. We should not quibble over 4.75% or 5.00%...its all good. However, that is about to change and in my opinion it will change rather quickly. Of course that is just my guess.
So lets take a look at the opinion of the bond guru, the one, the only Bill Gross of PIMCO. It is safe to say that when Bill talks, markets listen. Bill was recently quoted as saying that he could not figure out why mortgage rates were not .50% higher than they were right now. He said all of the technical and fundamental data pointed to higher rates than we currently have. Why do I mention all of this?
All of us, mortgage folks and realtors need to inform our borrowers/buyers that rates are very likely to go up at least half a point and perhaps more. This will most likely happen sooner rather than later. On a loan of $200,000 you are talking a payment of more than $60/mth higher. To some folks, that is the difference in buying the home they really want. A poll of "experts" was recently polled and most predict rates between 6.00% and 6.50% by the end of the year. I am going to try to do a better job communication to my clients that rates are most likely going to rise and probably in the near future.
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