Mortgage Rates Great Just Not as Great

Mortgage Rates - Is the Tide Turning?

Mortgage Rates – Is the Tide Turning?

Mortgage rates are still great, however the tide has turned a bit over the past few weeks.  In fact if the mortgage rate market was a jogger we have seen the “jogger” trip, stumble and then fall down today – no broken bones, just a knock down.  In non metaphorical nonsense – Mortgage rates began ticking up slightly starting a few weeks back.  Then we saw rates have a few more significantly bad days where the “ticking” was material.  Then, this past Friday…. the market lost nearly 80 basis points.   In the end, mortgage rates are .25% to .375% higher than 2 weeks ago.   Still, we are in an extremely low mortgage rate environment.

What to Watch for With Rates in 2015

Despite last Friday, mortgage rates are still extremely low.  Mortgage rates will continue to be volatile this year as so much in our US and the global economy is happening.  The biggest benchmarks to monitor will continue to be:

1.       Unemployment
2.       New Jobs Creation
3.       When the Fed increases the Fed Funds Rate (really, when they do it a 2nd time, a 3rd time etc…  – click HERE for an explanation of what the Fed Funds Rate is)

All 3 are connected.  The stronger #1 and #2, the sooner we will see #3.   Some bets are on this June for the first hike.  With regard to item #3 above, the pattern the Fed creates when they are in a Fed Funds Rate hike cycle is usually a repetitive one.  There are multiple rate hikes until a specific metric or goal is reached.  One hike shouldn’t do much to mortgage rates however a cluster of systematic hikes could push mortgage rates up.  The connective tissue here that helps make this “ok” is that the scope the Fed is targeting Fed Funds Rate hikes through is employment.   This means that the hikes will come only on the heels of a strengthening economy (more jobs, increasing wages etc….).
 
When more people have jobs, more people buy homes.   More people buy homes means more people sell homes.  As a result of more activity and people earning more money, a slight rate bump in the mortgage world is not a huge issue.  It’s palatable and non-threatening.   Going forward, I will keep you posted on the Fed Funds Rate/Employment situation.
By Jeremy House

 

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Jeremy is the Founder of The HOUSE Team and a Sr. Loan Officer/Branch Manager with PrimeLending. Over the past several years he has ranked in the top 1% of all loan officers nationwide and one of the top 200 loan officers in America. In the mortgage industry, the devil is in the details. Jeremy prides himself on being a student and an expert when it comes to everything mortgage related.

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