December 13, 2017

Bay Area Mortgage Rates Spike to Highest Level of the Year. Will They Return to Their Lows?


Posted by Jason Wheeler | Fully Follow Me | Subscribe

With a huge spike in interest rates last week many are freaking out on a new uptrend. I say hold your horses and they will be on their way back down in the few weeks to come. My recommendation is to wait on locking if you don’t need to fund this month.

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Mortgages Rates, continued pushing into their highest levels of the year Wednesday after yet another volatile session for bond markets.  Most lenders initial rate sheets were slightly improved from yesterday earlier this morning, but market movements during the course of the day prompted widespread repricing.  By the end of the day, it’s questionable that to continue thinking about Best-Execution in terms of 4.0-4.125% and more appropriate to shift that range from 4.125% to 4.25%.  That said, the combination of rate and fee at 4.0% is still competitive at many lenders, but it’s doubtful that many could offer 4.0% without some lender-related closing costs.

(read more about Best-Execution calculations).

(read more about Wednesday’s Big Changes in Rates).

This is now the largest magnitude move higher in mortgage rates since October 2011.  But things are potentially more painful this time due to extended period of flat, low rates, which makes the current movement much more abrupt with respect to recent norms.  Things really have changed overnight.

Compounding the pain is the fact that markets pulled back from ugly level quickly enough last time, and sufficient economic risk remained for us to hold out more optimism for a return of “high 3’s in the intermediate to near term future.”  This time around, trends are suggesting it would take a longer time to get back down to those rates, if it is indeed in the cards.

Are rates on a one-way trip higher?  Despite the ugliness of the past few sessions, we still can’t be sure about that.  Underlying bond markets are approaching some levels that many market participants are looking to for support.  Markets again today operated close to those levels without making a definitive gesture back towards recent, lower rates.  Despite the higher rates today, in terms of those market levels, the Mortgage-Backed Securities (MBS) that most directly influence mortgage rates, ended the day in similar territory to yesterday.  Although the absence of weaker MBS and Treasury levels is a good thing, it’s not the sort of thing that it makes sense to plan on.  We continue to expect things to be volatile, and ultimately, volatility can cause rates to move higher even if the day-over-day changes in bond market metrics are not.


About Jason Wheeler - Real Estate & Lending

Jason Wheeler has been a top producing consultant in real estate and finance since 2003. Originating, conventional, government, portfolio and hard money loans throughout California for one of the top mortgage companies in the nation. Jason works directly with homeowners and purchases homes throughout the Bay Area with the purpose of adding value to older outdated homes. IF YOU LIKE OUR CONTENT GO VIP HERE

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