Today was another wild ride in the mortgage rate arena. The stock market had a great day pushing the Dow Jones over 9000 for the first time since early November. This type of rally causes investors to sell treasuries, bonds and other securities that are less risky and move them over to the Stock market. In doing so, the markets that govern interest rates suffer. Today we saw a few of the lenders re-pricing interest rate twice. It is hard to give an exact rate, but is safe to say that most lenders and banks are quoting over 5.5% today with 0 points.
Per Bloomberg.com today: "Yields rose as stocks climbed to a two-month high on speculation government spending will curtail the recession"
What does this mean, if the government injects enough money into whatever markets, mortgage backs, bonds, treasury, you name it, it will help the overall health of the economy. As the economy gets better, it is the natural progression for mortgage rates to rise. Consumers and investors will start pumping money back into the stock market which pushes the mortgage rates up.
The national average of Mortgage Rates is based on last weeks closing and if you didn't catch the fine print it is also with .8 points as a fee. That equals about a 1/4 in interest rate: Actual average rate from last week would be 5.375 if we are comparing apples to apples, but I am not the media. I am only a mortgage professional who is trying to be truthful and ethical.
On the flip side, Lenders are closing out loans that were locked on November 24th and 25th (30 day rate locks) this will free up a lot cash from the lenders that will allow them to lend more. In doing so, we will see many lenders next week with great rates, more as a teaser. They will come out with a great rate in the low 5's for a few hours until they "get there fill", or sell what is allotted for the day and then they will push up the rate to stop or slow down the volume.
There are so many different directions that mortgage rates move in, it is hard to give an accurate prediction or determine which way rates will go.
Remember, if you are saving money in the course of refinancing your home, go with it. We may not see this again for quite some time!
Bill Nickerson
bill@billnickerson.com
Mortgage Network/Emerson Lending Company
Acton Massachusetts
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