Mortgage rates rose significantly yesterday, as mortgage backed securities and treasury bonds experienced their worst sell-off since last October. It appears that rates will continue to rise today. There was no particular news yesterday that caused the spike (and I certainly did not expect rates to rise as quickly as they did). Once treasuries and MBS broke through key support levels, they were off to the races. The previous two days’ Fed statements were somewhat more optimistic than they were previously, but they still seemed wary of the headwinds facing the economy, and did not take further quantitative easing off the table. Additionally, the Fed continued their commitment to keeping rates low into 2014.
So why did rates rise? To some degree it is the cumulative effect of several months of positive economic data and the ostensible resolution of the Greek debt problem (remember that mortgage rates tend to increase on good news and decrease on bad news). In many ways, gloom over the situation in Europe was the main check on rising rates. It is almost as though the previous three months of economic reports registered yesterday.
The economy still faces many headwinds, and I am not convinced that the economy will not stumble later in the year. Unemployment is still very high, the housing market is still struggling, gas prices are extremely high, and Europe is not out of the woods as far as debt problems go (Spain and Portugal will come to the fore shortly). Despite all this, the long term trend points to rising mortgage rates (the Fed could intervene with more easing to lower rates, but that is probably a coin toss at best).
For the past few months. We’ve been telling borrowers and potential borrowers that there is a limited downside in waiting to get a new mortgage because of the potential for a spike. There is still some time, but record low rates may be in the rearview mirror for good.
A Few of Our Popular Rates and Products*:
|Mortgage Product||Mortgage Rates||APR|
|30 Year Fixed Conventional Mortgage||3.750%||3.865%|
|20 Year Fixed Conventional Mortgage||3.500%||3.661%|
|15 Year Fixed Conventional Mortgage||3.125%||3.329%|
|30 Year Fixed FHA Mortgage||3.750%||5.092%|
|15 Year Fixed Conforming Jumbo||3.500%||3.670%|
|30 Year Fixed Conforming Jumbo||4.375%||4.474%|
|5/1 Adjustable Rate Mortgage||2.500%||2.476%|
|5/1 Adjustable Rate Conforming Jumbo Mortgage||2.750%||2.711%|
***Mortgage change frequently. These rates were quoted at 12:45 P.M., on March 15, 2012. Call 877-868-2503 for more details.***
Today’s News, Links, and Things I’m Reading:
DOL: Weekly initial unemployment claims dropped by 14,000 to 351,000. The four-week moving average remains unchanged. The four-week moving average is close to its lowest point since 2008.
Philip Pilkington: The Irish Begin to Wake Up to the Fact That They are Repaying Money That is Then Burned.
Reuters: Obama, Cameron Discussed Tapping Oil Reserves. I have made this point a bunch of times: the U.S. was a net exporter of oil last year. This is not an issue of supply and demand.
The Atlantic: The Villian. “The left hates him. The right hates him even more. But Ben Bernanke saved the economy – and has navigated masterfully through the most trying of times.”
NYT Dealbook: Public Rebuke of Culture at Goldman Opens Debate.
ProPublica: 13 Reasons Goldman’s Quitting Exec May Have a Point. I would not want to be Goldman Sach’s PR Person. Then again, I wonder if they even care about PR. It’s more or less beside the point for them.
Washington Post: Goldman Sachs Fights Back Against Claims of ‘Toxic’ Environment.
Wikipedia: Infinite Monkey Theorem. One of my favorite wikipedia entries.
National Geographic: Lady With A Secret. It is believed that a lost Leonardo Da Vinci drawing has been discovered. It could be worth $100 million.
NYT: Why Don’t Americans Elect Scientists? Many Americans can’t spell the word “science”, let alone understand it. Many of our politicians are seemingly proudly ignorant of science. It’s exacerbating.
Popular Science: “Designer Electrons” Can be Custom-Made for Future Devices.
Rolling Stone: Bank of America: Too Crooked to Fail. Submitted without comment.
* All rates shown are for 30 day rate locks. Longer locks are available. The APR for conventional loan amounts is calculated using a loan amount of $417,000, 1 point, a $495 application fee, $400 appraisal fee, $799 underwriting fee and a $16 flood certification fee. The APR for jumbo loan amounts is calculated using a loan amount of $500,000, two points, a $495 application fee, $400 appraisal fee, $799 underwriting fee and a $16 flood certification fee. The APR for FHA loan amounts is calculated using a loan amount of $295,000, two points, a $495 application fee, $450 appraisal fee, $715 underwriting fee and a $16 flood certification fee. Some rates and fees may vary by state. All interest rates listed are for qualified applicants with 720 or higher FICO and 80 LTV and are subject to mortgage approval with full documentation of income. All rates are subject to change without notice. All rates shown are for 30 day rate locks with 1 point unless otherwise noted.