30-year FRM has highest one-day increase on record NEW YORK – June 24, 2013 – Homebuyers who were waiting to lock in a mortgage rate – hopeful that the recent increases may decline a bit – could be out of luck. Freddie Mac’s popular weekly mortgage rate analysis noted a slight drop last week; but according to Matthew Graham, a rate strategist for Mortgage News Daily, Freddie Mac does its analysis over three days: Monday through Wednesday. On Thursday and Friday, rates bumped higher. Friday, in fact, had the highest one-day increase in average mortgage rates on record. “Taken together, this is the worst week for mortgage rates we have on record,” Graham said in an article. “Today is one of two times in the past 10 years where the average borrowing rate for top tier scenarios moved up by at least a quarter of a point.” The move led many advisors to suggest that homebuyers lock in rates now. While predicting the direction of rates continues to be as much art as science, Mike Owners, a partner at Horizon Financial Inc., suggested that rates wouldn’t drop again “without a total meltdown in stocks and some sort of tape bomb from left field.” Owens, Graham and other expert advise homebuyers to lock in a rate, based on risk of the unknown. “If you were on the fence for a refinance, you can climb down and go home because whatever you were waiting for is never coming back,” Owens added. Few observers expect the sharply higher one-day rate increases from late last week to continue. But most think higher rates are here to stay. “This movement will eventually end,” Graham said Friday. “There’s no reason rates can’t go even higher just because they’ve moved so high, so fast.” Constantine Floropoulos with Quontic Bank focused mainly on the unknown. “It would be nice to paint a picture of a possible rebound, but obviously all bets are off,” he said. The reason behind recent mortgage rate increases, both last week and over the past few months, comes down to Federal Reserve actions and the economic rebound. The Federal Reserve, through a bond-buying program, has tried to keep mortgage rates low in order to boost the economic recovery; and, by most accounts, it has helped. However, the Fed has always planned to cut back on its support of low mortgage rates once it appeared the economy was on the mend, and that led Chairman Ben Bernanke to suggest on Wednesday a possible cutback in the program later this year. That, in turn, contributed to the higher mortgage rates by Friday. Most experts agree that mortgage rates have to go up eventually. Overall, higher mortgage rates mean a stable economy. The timing of that increase, however, cannot be easily predicted. In the short-term, though, a boost in rates can make homebuying more expensive for current buyers and, in some cases, make it difficult for Realtors to close a deal. If a buyer failed to lock in a rate and is now worried, Graham suggests looking “at different terms, different loan types, different levels of [points]. Some borrowers may want to pay more closing costs right now in order to get to the payment they can afford.” Source: Mortgage News Daily, Matthew Graham, June 21, 2013 © 2013 Florida Realtors®
Posted on: Mon, 24 Jun 2013 19:29:31 +0000
Trending Topics
Recently Viewed Topics
© 2015