This was the day Garfield was talking about. The famous, fat cartoon cat has always proclaimed his distaste for the first day of the work week, and we—the working masses—have tended to agree. But November 14 was something else altogether: By the end of the day, the average mortgage rates had skyrocketed to 4 percent, the highest point of the year.
In case you had forgotten, the surprise election of Donald Trump shook up the market last week. That led to rates in the 3.75 percent range, which was shocking enough. We had hoped that things would level out quickly. They didn’t.
Now we may have some good news. As we mentioned, the average rates hit 4 percent on Monday, more than three days ago. And, for the most part, they’re still sitting at that point as of November 17. There has been some degree of improvement, however. Although Wednesday morning found the bond markets getting off to a weak start (almost always a bad sign for mortgage rates), things rebounded and some lenders reissued rates in the afternoon, suggesting more positive results.
Granted, these were a minority. And, more granted, we haven’t seen nearly enough to suggest that a major overhaul in trends is about to take place.
“Bond markets were flat today, a welcome respite from our huge recent losses,” said Ted Rood, senior originator at MB Financial Bank Residential Mortgage. “While rates didn’t rise, they didn’t fall either, and it’s far too early to call an end to the rising rate trend. I see little to be gained by floating, and the potential for more larger losses. The trend is not our friend…I’m still locking early.”
Alright, so it’s possible that we’re being overly optimistic. Can you blame us? Both lenders and buyers became a little jaded with rates sitting around 3.5 percent as long as they did. How soon can we expect this to impact the housing market? According to some sources, buyers aren’t going to let this small hurdle keep them way.
That said, if you’re looking to buy, locking your rate is certainly the safest bet at the moment. There is plenty of reason to suggest things could go back down…but we’re inclined to “believe it when we see it.” After all, we’ve jumped up to 4 percent and it’s had absolutely nothing to do with a potential rise in the Federal interest rate—which is what we’ve been tying a potential rise to all year. To argue on behalf of a forthcoming fall in mortgage rates, one could argue that Janet Yellen and The Fed Board, who have paused raising rates for much less dramatic reasons than a drastic change in Executive direction, could end up keeping things the same in December, despite most pre-election predictions.
Stay tuned…perhaps even more attentively than usual.