This interest rate ride is almost like a roller coaster ride at an amusement park. And the last week of it has not been fun as interest rates have crept up. The scary part is that we have got so spoiled on such low rates that we are forgetting even in the 5 range that rates are still very good. I think that 20 of the 24 years that I have been in the business that rates have been in the 6.5-8% range so why are we being so critical of a 5ish type rate?
These interest rates like to bounce around and what they will do...none of us know for sure. They eventually will go up but when is any ones guess. Expectations are for them to take a drop again this Spring as they typically do just in time for the Spring and Summer markets.
Bottom line thought though is that if you sit around waiting for that perfect interest rate or perfect time top buy...it will go right past you.
That extra 1/8th is not worth holding out for. It is not going to make that big of a difference on your buying power or your savings on the loan. If you have the opportunity to make it happen...do so.
There are a variety of bonds and notes that are traded on Wall Street. Mortgage Backed Securities are the ones that are traded that directly effect interest rates. These are traded just like stocks and can be all over the place in a given day as they are dependent on supply and demand just like a stock. Economic data is the huge drive for rates but other things can affect them as well such as interactions in other countries and even war. Dependent on the mood of Wall Street these bonds can be very volatile in a given day.
They can swing wildly because these traders that are investing in them are dealing with millions and even billions of dollars so even a slight change can affect their return on investment greatly. Because of this it has been said that traders on Wall Street are out of touch with reality....I would have to agree as they really do not see how it affects the average person when they do what they do.
Most people do not have the ability to access how these bonds are traded so some will just watch what the 30 or 10 year treasury bonds do for direction. These bonds can give you an idea but are not a perfect gauge of what mortgage interest rates are doing.
Next week I will get back in to the home buying process and a few other things. Please remember that if you have comments, feedback or even questions....they are all welcome. I have also started using twitter in an effort to get out various information as it pertains the mortgage and real estate market....feel free to follow me @omsiguy.
Have a great Weekend....it is warming up!!!!
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