There are day-to-day rate changes, and then there are trends. It’s looking increasingly likely that the continuing increase in mortgage rates is, unfortunately for homebuyers, the latter. As of Tuesday, numbers had increased for nine consecutive days, breaking the relaxed stasis of low rates that pervaded the summer. Currently, the average rate of a 30-year fixed-rate is hovering around 3.625 percent (although some lenders will still offer 3.5 percent).
“Bonds’ losing streak continued today, as rates rose slightly, again,” noted Ted Rood, a senior originator at MB Financial Bank. “I said last week the short term trend was not our friend, and that’s still the case. Floating now is akin to a desperate poker player drawing to an inside straight. It might turn out well, but playing against the odds typically doesn’t. Until this pattern breaks, I’m locking early.”
Last week we suggested that there was still hope for a return to the lower rates that have dominated the year thus far—after all, the first signs of rising rates came as a result of European activity, a “taper tantrum”-esque moment at the European Central Bank.
Nine days of continued increased movement means more. We reported last month that, although the Federal Reserve Board opted not to raise the Federal interest rate, there were dissenting members, suggesting that changes were on the way…given a few more pushes in the right direction. It’s possible that the movement in the market we’re seeing now is indicative of the system bracing for a Federal rise at its next meeting, in December.
According to the minutes from the September meeting, several members suggested that waiting too long for a rise in rates would backfire and create a recession, as has been the case in numerous periods where the unemployment rate had fallen to a comparable rate, followed by monetary tightening.
Applications for mortgages have fallen by 6 percent accordingly, however that’s also a continuation of a trend that we’ve seen largely since summer began (it’s possible that those who wanted to finance have already done so). Applications are still higher from the same period during 2015…when we were also waiting for a rate rise that December.
If you’re still sitting on the fence, now might be the time to lock in and get your rate. It’s tough to imagine news getting much better in the next few months.
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