Mortgage Rates Moved Higher Today:
After several news outlets reported progress in the US-China trade talks bonds sold off and mortgage rates moved higher. A possible US-China trade deal has been one of three major risks to low bond yields and mortgage rates.
Here are the three major risks bonds and mortgage rates have faced all year:
- US-China Trade Deal
- Improving economic conditions
- Brexit resolution
It appears that the US and China are very close to agreeing on a partial trade deal. Last month the two sides announced they agreed to a "Phase One" trade deal however shortly afterwards it was learned that nothing was in writing and there were some major roadblocks still in place.
As we have moved into November it's becoming more of a certainty that at least partial trade deal will get signed in the near future. The main question is what is included. And that is the biggest concern for low mortgage rates right now.
Mortgage Rates Moving Forward:
If you are purchasing a home or if you're a Realtor that have clients in the process of purchasing a home the best way to approach the current market is with caution. Moving forward mortgage rates might continue to move higher and sometimes these moves can last weeks or even months. So be careful and be smart.
Mortgage rates are .25% - .50% higher compared to their September lows (depending on the lender and the type of loan) and if the bond market continues to selloff we could easily see mortgage rates push another .50% higher in a short amount of time.
But What If Mortgage Rates Go Back Down:
That might happen especially if it turns out that recent reports of an agreement turn out to be false. But that's a BIG if and when you're buying a home the last thing you want to have happen is the rate you thought you were going to get is .50% - 1.00% higher because you decided to wait on locking in terms.
Most lenders these days (not all) provide some protection for those that lock in and rates significantly fall before closing. It's called a "float down". Let's say you lock in at 4.25%, and mortgage rates move below 4.00% then the lender will usually renegotiate the locked in terms. You won't receive the lowest current terms but it will be better than your locked in terms.
Keep in mind that if the rate moves from 4.25% to 4.125% the lender is not going to "float down" the rate.
JB Mortgage Capital, Inc.
If you are purchasing a home or if you are looking to refinance your mortgage please be sure to contact us for a no-cost/no-obligation quote. We offer low mortgage rates, fast closings and industry leading customer service.