Last Wednesday, the market saw mortgage rates spike by as much as 1 percent. Thursday and Friday offered little relief, and rates are rapidly on the move northbound again today. Someone who was offered a mortgage rate of 4.875 last Tuesday was looking at the same scenario with a rate of 5.5 the next day. Today, mortgage rates are a virtual mirror image of last Wednesday.
If you’re a homeowner looking to refinance and you’re waiting for rates to fall back to the 4.5 range we saw just one month ago, I highly caution against that rationale and suggest locking in a rate today before they head back to the 6 percent range, making a refinance virtually futile. Mortgage rates will indeed head back to the 6 percent range, but the question remains: how fast?
The stock market has rallied and stabilized in recent months based on the belief that the economy will rebound by the end of the year. The recent increases in mortgage rates have slowed both refinancing and home buying efforts, however, it’s highly unlikely the economy as a whole will be derailed as a result of the downturn in mortgage applications.
The lower rates in March and April led to a rush in mortgage applications from homeowners looking to refinance. With mortgage activity on the decline in recent weeks, all indications reflect it will decline even further.
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