If you were hoping for a Christmas miracle as we approach the end of 2016, we’re sorry: The real world doesn’t work that way. The best we can offer is a Christmas “slight move in the right direction.” But it could be much worse.
Since we’ve last spoken, rates have only continued to heighten in the wake of The Fed’s announcement of a rise in the federal interest rate, as well as the updated projections for further rises during 2017 (affectionately known as “the dots”). Some lenders have reached average 30-year fixed rates of 4.5 percent…more than a percentage point higher than they were during Summer.
The first bit of good news is that the rises slowed down across the last few days, although they were still a touch alarming. Considering the wider context, market movements suggested that they should have gone down. Perhaps wary of overreacting after such an extended period of record-setting friendly rates, most lenders stayed within the range of 4.375 to 4.5 percent. Now, finally, we see some settling back down into the 4.25 percent range (although some remain at the higher end of the aforementioned spectrum).
It’s tough to say where rates will go from here. Theoretically, there was precedent for them to have fallen earlier this week, and now they have. That makes it easy to suggest that they’ll continue on that trend. A little too easy to make that prediction, if you ask us. At this point, we’re not willing to put money on rates heading one way or another. Things have been unpredictable over the last month and there’s no reason why that will stop as we approach a Presidential transfer of power.
But here’s the biggest reason why we won’t make a wager right now: We’re heading into the last week of the year, a period when shifts tend to be minimal. This is a time when there’s very little movement in the markets, barring dramatic events. That can make the first few days of the year more spastic, consequently.
Because of this, there’s incentive for borrowers to lock in for longer periods of time (and also to deal with the increase in vacation days taken by mortgage lending offices) during the holidays and at the turn of the year. Now’s certainly not the time to float a rate, but you should certainly float the idea of locking in by your clients.
Enjoy the holidays, and we’ll see you next week!