Mortgage Market Update
Mortgage Market Update- July, 26 2013
While mortgage rates have been climbing steadily since last fall, this week we saw a spike in rates that was greater than any movement we have seen all year. In fact, rates jumped about one quarter of a point increasing rates to about 4.5 percent ( 4.59% APR, 20% down payment, primary residence purchase with 700+ credit score, 250k loan amount). While this rate may be higher than what many consumers are accustomed to seeing, keep in mind, these rates are still low. There is still a possibility that rates could continue their upward trend though there are some indications that we may see a downward trend.
Rumors about Bernake replacement
The current “conventional wisdom” is that Larry Summers is the leading favorite to replace Ben Bernake at the Fed. This may result in a slight increase in interest rates since it is widely believed he may curb the current bond-buying program that has been in place to keep rates lower. Of course, the bigger question is whether easing too soon will cause a financial calamity.
Defaults and rates
A recent release of data showed that housing loan defaults are increasing again. While mortgage delinquencies are down overall from June of 2012 by nearly seven percent, there has been a significant increase in new delinquencies over the last five months. This could result in tighter lending requirements and may also put some downward pressure on rates.
Home sales and pricing
While new home sales continue to be robust, the pricing on these homes is not keeping pace with demand. In fact, a recent report shows that sales continue to rise but pricing on a month to month basis shows a modest decline. Sales of properties in the northeast continue to be sluggish while sales in the south continue to be extremely robust, up nearly 11 percent.
Upcoming week news
Some of the upcoming economic news may have an impact on rates including pending home sales due out on July 29. In addition, GDP for the second quarter will be released on the same day. The first week of August will bring a host of news including unemployment, hourly earnings, personal spending and personal income and consumption. There is little doubt that there will be a lot of news in the next week to ten days that will impact the overall mortgage market.
The time to lock in interest rates may be now. With the amount of news due out in the next several days, it may be beneficial whether you are buying or refinancing to consider locking your rate in now. This is especially true if the news remains positive which could have a negative impact on rates. Contact Core Mortgage Financial if you are considering buying or refinancing and we can help you get the best rates available.
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Disclaimer: Please call for an accurate rate quote for your current financial situation. The rate quote provided in this article is for informational purposes only.