Mortgage rates took a break last week, but they will soon resume their upward march as lenders face higher mortgage fees that will get passed on to consumers.
I have had several questions about the upcoming trend of mortgage rates. Here is the answer: UP! All interest rates are headed up over the next three years; back to more normal levels. This would put the 30 year around 7%. The question is how fast rates will rise.
Over the past several weeks, we have had lots of positive economic news; good GDP; lower unemployment, higher non-farm payrolls. All these positive reports are giving the FED more reasons to start the “QE tapper” sooner. In the beginning of November, most experts expected the taper to start in March. Now experts are giving a 50/50 chance the taper will be announced at the next FED meeting December 17th. The tapper is the decreasing of the FED’s purchase of bonds on a monthly basis causing rates to rise. The only event that could slow this course would be a terrible holiday retail season. The bottom line is the economy is getting better and no longer needs the FED to support it. This is good because a better economy means more home buyers!!!!
The most significant economic data next week will be the Retail Sales data and the PPI inflation report. Retail Sales account for about 70% of economic activity and will be released on Thursday. The Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products and will come out on Friday. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday. The next Fed meeting will take place on December 18.
So, should we hope for a poor holiday season so that mortgage rates remain low or should we just accept that fact that rates will be rising over the next few years? Either way, the bottom line is... if you want to refinance your existing home, or purchase a new home, the time to do it is right now!
Information in this article from Movement Mortgage.