Mortgage rates are cyclical meaning movement is based on many economic factors. Even though current rates have been at historical lows, like many things in life; nothing last forever. The benchmark 30 year Fixed Rate mortgage moved up more than 10 basis points from week to week activity. Industry giant, Freddie Mac’s weekly rate survey released this morning has the rate at 3.630%, up from last week’s rate of 3.520%.
Freddie Mac is a top secondary market provider who purchases mortgage originated at the consumer level by banks, thrifts, credit union, mortgage bankers and a cadre of private lenders. Freddie Mac in turn packages and securitizes the mortgages which are bundled for sale on Wall Street and other investment companies.
Economic is trending in a positive direction
Unemployment is headed down, companies are stepping up their hiring levels, housing starts are up, and Wall Street has been breaking records, on and on. All this translates into improved consumer confidence. The basic premise of interest rates or money is supply and demand. As the demand increases the cost also increases. Transversely and the reason for the previous low rates was based on low demand. As more people enjoy economic improvement; from finding a new job to enjoying improved investment returns, mortgage rates will edge up.
The question for many is will the trend stabilize or will it continue to rise week after week? Regardless of interest rate movement the keys for most consumers will be positioning and timing. Refinance transactions continue to dominant most lenders pipelines. Currently to protect themselves and insure customers obtain attractive rates, most lenders lock rates up to 60 days, as in this environment it is not uncommon for transactions to take 45 to 60 days to close. On the other hand, the coveted purchase market is showing signs of improvement and lenders rely on the close of escrow in determining the lock period.
In the end of the day, particularly as we head into the spring season, smart consumers will be setting some realistic parameters such as projected low points and high points.
Rates for popular programs:
- 30 Year Fixed Rate - 3.630%
- 15 Year Fixed Rate - 2.790%
- 5/1 ARM - 2.610%
- 1 Year ARM - 2.640%