Uncategorized March 2, 2014

Fixed Mortgage Rates Continue Their Gradual Climb Higher

Freddie Mac recently released results of its Primary Mortgage Market Survey (PMMS®), showing average mortgage rates mixed with the fix-rate products were moving higher for the fourth consecutive week, while adjustable rate mortgaged eased. Results show that the 30-year fixed-rate mortgage averaged 4.37 percent with an average 0.7 points for the week ending Feb 27, 2014, up from last week when it averaged 4.33 percent. A year ago at this time, the 30-year fixed rate mortgage averaged 3.51 percent.

Friday’s bond market opened in negative territory even though a key economic indicator showed weaker than predicted results. The major stock indexes are showing noticeable gains with the Dow up 96 points and the Nasdaq up 17 points. The bond market is currently down 14/32(2.69%), which will likely push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point.

The first of today’s two economic reports revealed that the economy grew at a slower pace in the last three months of 2013 than previously estimated. The first revision to the 4th quarter GDP came in showing a 2.4% annual rate compared to last month’s initial estimate of 3.2%. Analysts were expecting to see this revision show a 2.6% rate of growth, meaning the overall economy grew at slower pace than many had thought last quarter. That makes the data good news for the bond market and mortgage rates because long-term securities such as mortgage-related bonds become more attractive to investors during weaker economic conditions. However, the bond market doesn’t seem to be too impressed with the news this morning.

So what does this mean to you if you are in the process of buying a home. Mortgage rates are likely to go higher but will be variable from day to day. Al Bowman, Mortgage Writer for Realtor.com, advises:

If I were considering financing/refinancing a home, I would….

Lock if my closing were taking place within 7 days…

Lock if my closing were taking place between 8 and 20 days…

Lock if my closing were taking place between 21 and 60 days…

Float if my closing were taking place over 60 days from now…

This is only my opinion of what I would do if I was financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.