Mortgage rates may be near historic lows, but have jumped around somewhat in recent weeks.
This has been perplexing to most people mulling a home purchase or refinance this spring. It's not always easy to pinpoint the cause of interest rate volatility, but much of it has to do with jittery capital markets, supply-and-demand dynamics, and even economic turmoil abroad i.e. Europe.
Outside investors also play a key role in the mortgage marketplace, and demand for mortgage-backed securities heavily influences the direction of interest rates. When you take out a home loan, your loan is pooled with other mortgages, a process called securitization—to create mortgage-backed securities. Investors then buy mortgage-backed securities as part of their investment portfolio. If you're getting serious about buying a home or refinancing, here are a few things besides your credit score that could impact the rate you get on your home loan:
For example, an economic slowdown in the United States. Many times, these generalized concerns cause a "flight to quality" experts say, in which anxious investors move money out of riskier asset classes such as stocks and into those with greater perceived safety such as bonds, mortgage-backed securities and U.S. treasuries. Heightened demand for these "safer" investments drives down interest rates, which ultimately benefits home buyers and homeowners looking to refinance existing home loans.
Domestic issues and policies. While inflation has not "officially" ramped up in the U.S. yet the core prospect of higher prices is still on the minds of Americans and investors alike. Fixed-income investments such as bonds and mortgage-backed securities are particularly vulnerable to spikes in inflation and also keep an eye on the debt ceiling, which just got a temporary increase.
Ongoing Lock/Float Considerations
- Rates and costs continue to operate near all-time best levels
- Rates could easily move higher or lower, but given the nearness to all-time lows rates are still a great deal today in my opinion.
As you can see it is very hard to put your finger on any one thing to gauge where rates are going, and as always I am a phone call away to quote today's current rates 'Accurately' 480-705-0199
-Tony :)
Comments(0)