Low Mortgage Rates... Fleeting?

Last week’s events in the financial markets carry a simple message to people looking for a 30-year mortgage, whether they’re purchasing or refinancing: Get your low rate while you can.

Over the course of last week, rates on 30-year loans jumped drastically, ending around 5.25%. That rate is still low compared to historic standards, but it is a significant jump when compared to the 4.75% and below of previous weeks.

Many are wondering what caused this surge in interest rates. Well rising government debt and growing hopes of economic recovery are driving up long-term interest rates on government debts. The 10-Year Treasury bond yield surged from 2% earlier this year to over 3.5% last week, which caused other long-term rates to increase.

What does all that mean? Well for those of you looking to refinance your home, buy a new home, or even sell your home, it may mean bad news if the mortgage rates continue to rise.

For those of you looking to refinance, you may be out of luck already if you have not locked in your rate. Last year, new mortgage rules were introduced to avoid another subprime mortgage scandal. The days of being able to lock in a rate while you refinanced or looked for a home are over. Now borrowers’ rates are not locked in until after the home’s appraisal comes back.

And for those of you looking to buy a new home, these increased rates can translate to a significant increase in cost. On a typical $200,000 home with an 80% loan, the increase from 4.75% to 5.25% can mean $50 per month.

Rates are still reasonable now, but who knows where they could be in the coming future. The message is clear: Get your low rate while you can.

Let CREFCO help you move through the process while the rates are still low.
Apply Online Today