Why Mortgage Rates are Rising

Did you get the memo? Rates are up nearly a full percentage point in the last 2 weeks. I hate to say "I told you so" (see the last paragraph). It certainly isn't pretty in the mortgage market the past couple of weeks. In terms of payment, a $300,000 mortgage now costs you an additional $240 per month.

You may be asking yourself, "what happened?" The answer: The global economy does not approve of the massive US debt we continue to acrue and there are concerns over inflation. The complete answer is material for a thesis, but the basic premise is here. The government has kept rates artificially low buy purchasing mortgage-backed securities. Inflation is on the minds of every economist and person on Wall St. We know that if the economy rebounds, inflation could soar. Mere speculation can torpedo mortgages rates - hence the impact of the last two weeks.

If you were planning to refinance or intend to purchase a property, there are a few moves you should make to put yourself in position to get the best rate. First, understand that internet and print advertising are archaic in the mortgage industry. Rates change too fast (in fact, every 2 hrs, 36 mins last week) to rely on tomorrow's newspaper for the "best rates".

Make sure you have someone looking out for your best interests. Know what you can afford. Do not hope for a rate to drop .125% if you know you cannot afford the mortgage if rates rise .25%. Rates rose .5% in 2 hours last week.

Lastly, focus on what you can control. You cannot change mortgage rates. Take the best rate and terms available because most lenders offer programs that allow you to re-lock a rate if it comes down.

Email me if you do not have someone watching rates for you. If you have any questions or further discussion, please feel free to leave a comment or contact me. Make it a great day!