Mortgage Rates Up!

If you are an avid follower of mortgage rates you will have noticed that we have taken quite a hit since last Friday rising from 5.875% to 6.25% on a 30 year fixed rate mortgage. This has continued the theme of VOLATILE mortgage rates and in particular consumer perceptions on what rate they should or should not expect to get. Why have the rates increased so much in just 3 days? The most simplistic answer I can give has to do with company earnings coming in better than analysts forecasted. Why does this matter? When analysts forecast company profits it is always in a "per share" basis. For instance when Wells Fargo is trading at $29.00 a share and analysts have "priced in" a revenue decrease of $30M for the first quarter and the actual number was only a $15M loss traders will then "price in" the added value of there shares based on the new data thus putting more money in the stock market, which normally translates into less money in the avenues that affect mortgage rates (i.e. Mortgage Backed Securities).

As I stated on my Monday post this was going to be a very volatile week as there was a ton of economic data being released, Regional Fed Presidents were speaking and it is earnings season for most companies. All of this added up means a frustrating week for mortgage rates. If you are a really keen individual you will have noticed that the ARM rates have also become less attractive. We have gone from 5.5% to 6.25% in just 3 days! Why? Well, the "spreads" between the short term treasuries; in particular the 10 year treasury and MBS have widened to the point where there no advantages between short term and long term money at the moment.

As usual continue to check back to this site for updates and should you have any questions, comments or concerns please do not hesitate in contacting us.

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