A quick weekly overview of where the mortgage markets are, where they have been, and where they are expected to go.
- Looking Back: Economic news this week was much better than expected, driving investors into stocks and away from mortgage-backed securities. Volatility was the watchword yet again, most of it negative; by the end of the week, mortgage prices were a whopping 159 bps worse than where when they started the week.
- Right Now: For the “ideal” borrower (i.e. down payment on a purchase or equity for a refinance of at least 20%, FICO score of 740 or higher, and paying 1 discount point, with loan amounts of $417k or less on a 30-year fixed-rate mortgage) in the DC area, rates are currently in the 5.375% to 5.625% range.
- Moving Forward: Next week will again be dominated by reactions of the stock market to any economic data that comes out, as well as the quarterly Treasury auctions on Tuesday-Thursday. In Bankrate’s weekly survey of mortgage analysts about where they expect rates to move in the next 45 days, 31% predicted that rates would go up, 46% predicted that rates would stay roughly level, and 23% predicted that rates would go down over that period; compared to last week’s 31-38-31 split, that shows that some analysts who previously thought that a slow economic recovery would eventually bring down rates have now decided that current rates are the “new” status quo. In the shorter term, rates will continue to see high volatility, with a negative bias against economic news–any better-than-expected economic news will have a strong negative effect on mortgage pricing (rates will go up quickly), while worse-than-expected econ news will have only a mild positive effect on mortgage pricing (rates will come down slowly). We again strongly encourage borrowers who find a good rate to lock that rate in if possible unless their tolerance for risk is very high.
These updates are intended to give you a very quick snapshot of current mortgage rate trends. As a result, they are full of simplifications and assumptions; if you are currently in the process of purchasing or refinancing a loan, make sure to talk to your mortgage loan consultant about your specific scenario and the factors that affect it. If you aren’t working with a loan consultant yet, feel free to contact us and we’d be glad to meet with you for one of our free, no-obligation mortgage scenario consultations. And if you’re a data junkie and want to follow the gyrations of the mortgage markets in real time, learn about the shorthand that we use in discussing mortgage pricing and then follow us on Twitter.
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