What Happened To Mortgage Rates?

Since Thursday May 21, mortgage rates have seen a steady move in the wrong direction. On Wednesday May 27 we saw one of the largest upward moves in rates for the last 12 months. In less than a week mortgage rates have managed to go up nearly a full percentage point. That's right what was 5% is now 6%.

So one has to ask, what is causing this? Several factors have come into play. A huge increase in the amount of debt issued by the US Treasury, higher oil prices, stronger than expected consumer confidence numbers and fears of inflation all had a part in today's strong increase in rates. In addition, the looming GM bankruptcy and rumors that the Fed may slow down it's purchasing of mortgage paper have all contributed to the negative situation in the bond market.

For those who are sitting on the sidelines wondering if now is the time to buy, the market is telling you YES! Many expect prices to bottom out soon if they haven't already. The signs that cheap money is all but gone coupled with a First Time Buyer tax credit that is set to expire on December 1 are all great indicators that the perfect buying opportunity may soon be going away.

For those of you who want to take advantage of lower rates by refinancing, the window may have closed for the time being. Lenders are struggling to close a huge pipeline of loans that are already in process and cannot keep up with the inquiries for new loans. Pressure on mortgage rates will slow refinance applications and bring loan processing times down. Lenders have been struggling to keep up with demand. As demand dries up, look for lenders to be more responsive to inquiries.

Long story made short, one thing is for certain, things will change again :)