Mortgage rates rose once again yesterday as mortgage backed securities and Treasury bonds sold off. The sell-off was a continuation of last week’s action, and we have now seen yields on 10-year Treasury bonds increase by about forty basis point since the Federal Reserve released a somewhat rosier economic forecast than was anticipated last week.
The improved economic forecast from the Fed is just one reason for the increase in rates. The last several months have seen economic reports indicating that the economy is slowly growing stronger, and a debt crisis in Europe was narrowly avoided (at least for the time being). The run-up in rates over the past two weeks is the culmination of these factors.
So will this upward trend continue into the future? As of right now, stocks are selling off at least partly due to the expectation that China’s economy is slowing. In addition, housing starts for February were reported this morning, and they were weaker than anticipated. These two factors could keep rates from rising further today, but I still think the longer-term trend is for higher rates.
The real wildcard in the future of mortgage rates is whether or not the Federal Reserve will embark upon more quantitative easing. A third round of quantitative easing in the form of MBS purchases would drive down mortgage rates significantly. A strong recovery would most likely cause the Fed to take this option off the table, but we have yet to hear anything definitive. While I would guess that QE3 is somewhat less likely than it was a month ago, I think it is still probably a 50-50 possibility. This week features many speeches from Fed members, so keep an eye on those for any indicators about QE3.
For the immediate future, if you are looking to refinance or purchase a home, I would recommend locking your mortgage rate sooner rather than later.
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 12:35 P.M., on March 20, 2012. Call 877-868-2503 for more details.***
Today’s News, Links, and Things I’m Reading:
The Palm Beach Post: Fast Foreclosure Bill May Return. A new bill to speed foreclosures along died in the Florida Senate. It may be reintroduced next year. As always, I’d like to remind people what happened the last time Florida decided to speed along foreclosures:
Rolling Stone: Invasion of the Home Snatchers. If you’re looking to speed foreclosures along, fine, just make sure that all the appropriate laws are followed in the process. That seems to be the difficult part.
FireDogLake: Wells Fargo Deals Major Setback to Administration Refinance Program. This may cause HARP 2.0 to stumble right out of the gate.
McClatchy: Army Threatens to Fire Whistleblower for Talking to McClatchy.
The Guardian: How One Man Escaped From a North Korean Prison Camp. Quite a story.
ProPublica: Breaking Down the Mortgage Settlement: How Far Does $26 Billion Go? Short answer: not very far.
Calculated Risk: Housing Starts Decline Slightly in February. And it was unseasonably warm in February. Methinks this does not bode well.
Slate: Why Trayvon Martin’s Killer Remains Free. On Florida’s idiotic “stand your ground” law.
LA Times: Uproar Grows Over Citizen Volunteer’s Killing of Florida Teen. As well it should. This situation is going to get real ugly, real fast.
Felix Salmon: Why I’m Playing the Lottery.
Reuters: Asma al-Assad: a “Desert Rose” Crushed by Syria’s Strife. Um, I’m pretty sure she knew who she was marrying.
Scientific American: U.S. Defense Department Develops Map of Future Climate Chaos.
National Geographic: “Lost” Great Wall of China Segment Found?
* 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.