Economic Conversation

Freddie Mac reported 30 year fixed mortgage rates at 5.2% yesterday but that number is sure to move up in the next few weeks.  The 10 year treasury rate yield has moved from 3.3% all the way to 3.7% in two short weeks and mortgage rates have barely budged.  Back in late May when this was the case, the 30 year fixed mortgage rate moved almost a full percentage point higher in ONE day.  No one knows if that is going to happen again, but the disconnect between the 10 year yield and mortgage rates is concerning.

If the 10 year yield continues its strong uptrend towards 4% it is likely that we are going to see mortgage rates get very close to 6%.  Many homeowners and first time home buyers that were sitting on the fence deciding to place that mortgage application are going to be sorely upset in a few weeks.  If this group of people continues to wait for mortgage rates to fall, they could very well be out of luck because mortgage rates are not likely to fall back to 5% anytime soon.

If you have been thinking about going through the mortgage application process, now might be the time to do it because if you wait, you could see yourself looking at a mortgage rate of higher than 6%.  It is advisable to go ahead and get that application in so you avoid these steep jumps that are likely to happen in the next few weeks.