Residential Mortgage Rates are on the rise!!!

Remember the old expression commonly used by equities and bond traders, when investor's become overly greedy, "Pigs Get Slaughtered". Well, certainly interest rates stabilizing in the mid to high 4's the last three months has been awesome for home buyers and homeowners, but these low rates will not last.

If I had a crystal ball on what they will look like in 6 - 12 months, I wouldn't be writing this blog. But I can tell you, economists are predicting mortgage interest rates will likely go up before they go down, going forward. Rates this week have worsened significantly, as much as .500% landing in the 5.250% for a 30year fixed with a .5 point cost. Obtaining a rate in the low to mid 5's is still terrific, however, many consumers are stilll waiting on the fence, hoping to see rates go down to 4% or better. They should not hold their breathe. The 10 year Treasury yield has been trending up and is now holding in the 3.9% range. When this happens, coupled with the stock market gaining value, and inflation around the corner, all makes for a negative effect on interest rates.

In addition, with the rise in mortgage applications recently, the banks are clogged with loans, limited staffing, merger dislocation, and tougher lending standards which all spells out a longer loan turnaround process for "worthy" borrowers.As it is, currently we're seeing refinances take between 45-60 days to actually close and fund.

That's why I tell clients to get your applications in so your mortgage broker can get your loan package into the lender approval cycle, as underwriting approval which normally takes 5 days is taking up to 25 business days, depending on the lender. Once a loan package is received and accepted by the lender, the broker can float the rate, wating for an opportune time to lock.The closer the lock is to the target close time the better the rate. In this environment, I usually lock in a 30 day window.

Bottom line, the lending complex is clogged up, and the loan process can be painful due to risk averse lenders, so talk with your mortgage specialist or call me to discuss your situation and take advantage of these rates while they last.