Mortgage rates continue to rise. Last week’s Primary Mortgage Market Survey from Freddie Mac showed the average rate on a 30-year fixed-rate mortgage rose to 4.08% with 0.5 points. By Freddie Mac’s measure, rates are up about 50 basis points over the last three weeks. The last time that I can recollect seeing such a steep rise way during the taper tantrum of 2013. Rates are now at the highest point since the summer of 2015. According to a CNBC article, the spike in rates has pushed the average home price up by about $16,000.
Yields on 10-year Treasuries climbed at high as 2.49% last week, and are presently sitting around 2.45%. Stocks are at record highs, and most recent economic data has been pretty positive. It looks as though the Fed will almost certainly hike rates this month, although that should be largely baked into bond prices now. The potential that the Fed will need to tighten policy at an accelerated rate in 2017 is likely not priced in. I anticipate that mortgage rates will continue to rise.
Click here to get today’s latest mortgage rates.
The rate outlook:
Rates are on a pretty clear upward trajectory. At some point, I would anticipate that the bond market would find support and perhaps rally as yields become attractive to investors – although I have absolutely no idea when that might occur.
This morning we began to see a rally in the wake of the Italian referendum. It lasted for all of a couple hours. Here’s some background on the Italian referendum, but the long and short is that the Italian Prime Minister Matteo Renzi proposed changes to the Italian constitution, and the Italian people overwhelmingly rejected it. Renzi is going to resign in the aftermath. A period of uncertainty is expected to follow, and this could further embolden nationalist far-right groups that have been rising in Europe as of late. Both France and Germany have elections coming up in 2017. We’ve seen European politics have large impacts on the markets in the past – see the Grexit and Brexit votes. Anything that is seen endangering the Euro will probably cause a flight to safety which would cause bonds to rally, and would help mortgage rates. These are longer term issues, but pose risks that we need to be cognizant of.
In any case, that’s approximately where we stand on this Monday morning. Mortgage rates have surged since the election. If you want to refinance your current mortgage, you should probably look into doing that ASAP. If you’re buying a home, houses have become less affordable. Look for both trends to continue.
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from Total Mortgage Underwritings Blog http://ift.tt/2g0GoNe
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