This has been a tough week for the stock market. One that many say is a long-overdue correction. On the mortgage front rates continue to climb as this week they jumped 10 more basis points and now sit at 4.32%
Most consumers understand rates are cyclical and are not stagnant so it is not uncommon for them to move up and down. What is alarming may be ever since the tax cut was announced as well as the subsequent news major employers would be granting bonuses, they have climbed nearly ½ point. The number may appear insignificant but with all of the hoopla of the benefits of the tax break to “regular” people it is worth noting the increase in rates have translated into higher cost or more payments. Specifically, with mortgages, the impact is approximately $44 more each month. The soundbite that you will see more money in your paycheck starting around February may be true but the reality is if you are in the market for a mortgage, you will need it!
While the increase in rates was projected, it shows why you need to be laser focused on the details especially if you are in the market to obtain a new mortgage or refinance your existing one. If that is you, positioning continues to be the name of the game as the slightest hesitation can be costly. Perhaps that explains why mortgage applications are also rising because with normal closing times projected from 45 to 60 days, you don’t wait for rates to rise through the roof before you finally decide to start the application process.
While the drop in the market has some concerned, the bigger issue is whether the Feds will increase the discount rate to tamp down on inflationary concerns?
Here is a recap of this week rate survey
|30-Yr FRM||15-Yr FRM||5/1-Yr ARM|
|Fees & Points||0.6||0.5||0.4|
Freddie Mac produces the weekly rate survey. Data is comprised from a pool of its lenders and the information is used to gauge movement and provide a target of interest rate movement.