Mortgage rates jump to highest level of 2018


The news is not enough to create panic but mortgage rates reached their highest level of 2018 and now sit at 4.470%.  That is the rate reported by Freddie Mac from their weekly primary market rate survey, which is the industry standard for gauging consumer mortgages.  It represents the benchmark thirty-year mortgage.  The survey is compiled from a sampling of lenders who sell mortgages to them.

The increase represents a five-basis point increase from week over week reporting.  Among other things the rate increase is attributed to the uncertainty over the impact of tariffs which the Trump administration recently announced.

 

Most consumers understand mortgage rates are cyclical and even the five-point increase would be considered normal movement.  On the other hand, those in the market for a mortgage pay attention to trends as positioning is a big factor in determining when to apply for a loan.  Purchase transactions are driven by the close of escrow and refinance transactions take approximately sixty days to close.  So, if the assumption is that rates will further increase it is more prudent to lock in the rate at time of application.  Of course, if your analysis conclude rates might drop, then your strategy might be to submit your application but “float” the rate or lock in at a later time.


Tax Cuts

 

The financial projection for 2018 was that rates would increase from their 2017 level.   There was much fanfare about the historic tax bill which was passed in December 2017.  Hopefully you were lucky enough to receive bonuses touted by the majority political party as well as Donald Trump?

“Still, the vast majority of adults don’t seem to have sensed the effects of the tax cut on their personal finances.” Politico

Although the public still hasn’t been told of how the government plans to pay for the tax cuts which by 2020 will push the tax deficit pass the TRILLION-dollar mark, many have taken the position to support anything which puts a little money in their pocket, even on a temporary basis.

Donald Trump proclaims tax cuts will revolutionize economy. Some are still waiting on promised bonuses or larger paychecks.

Expect Mark Short to be taken to the woodshed

Perhaps he misspoke but later this week do not be surprised if Trump and his strong allies do not take one of their own directly to the woodshed.  Why?  There was so much hype in attempting the justify the tax cuts and/or more money in worker’s paychecks, one would surely assume the numbers would be more than five percent!!!!

However, contrary to what the Trump administration has been boasting their own Director of Legislative Affairs and Assistant to the President for U.S. President Donald J. Trump, Mark Short belted out on “Meet the Press” that there is good news as five million people have financially benefited from the tax bill passed in December.  The problem with Short’s assessment is while five million represents lots of folk, it represents less than five percent of the total workforce which is nearly 125 million, as reported by the Bureau of Labor Statistics.  Wasn’t it presented that nearly every worker would see an immediate gain?  Maybe you were one of the lucky five million?

Hear Short’s specific comment at the 40 second mark.


Cost of good increase

 

Everyone appreciates a good economy.  The result is consumer confidence has increased and that is a positive sign which doesn’t get much debate..  The impact for most consumers is even though they have more money in their pocket, the increased cost of goods has eaten away at those gains.

People take part in a protest against the Republican tax bill in Los Angeles, California on December 4, 2017. Democrats and many economists warn that the GOP tax plan gives large tax cuts to corporations and the wealthy and will hurt middle class families. (Photo by Ronen Tivony/NurPhoto)

On the mortgage front today’s rate represents a fifty-basis point increase from year over year reporting.  The result is the average consumer ($244,000) is paying an additional $102 per month over a tad over $1,200 for the year.  Based on those numbers you will need more than a tax cut or bonus to break even.

Current rates for popular programs**

April 19, 2018

30-Yr FRM 15-Yr FRM 5/1-Yr ARM
Average Rates 4.47 % 3.94 % 3.67 %
Fees & Points 0.5 0.4 0.3
Margin N/A N/A 2.76

** source – Freddie Mac rate survey

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