Mortgage Rate Highs Are Back

Mortgage Home Base reports on the comeback of high rates, but are they here to stay? The highest it’s been since April 2014, the movement due to momentum could very well be what is to blame for this unexpected increase of as much as 25 basis points.

Just a week ago, word spread that the Federal Reserve had plans on increasing rates and proven to do just that, rates have skyrocketed by as much as 0.25% this week.

For interested home buyers looking to lock in a rate for a purchase, this goes to show that neither the feds or rates itself waits for nobody. Homeowners looking to refinance to a lower rate may have to make a quicker decision soon, since there is no telling if these rates are going to continue to rise over the next few weeks.

Despite the increase since four months ago, rates are still lower when compared with a year ago. The average for 30-year mortgage rates are currently near 4.25% at this time resulting in a marginally lower rate for FHA and VA Home loans.

2014 Low Rate Trend Cut Short

Low Mortgage Rates were trending in 2014, unfortunately for only a good four months. The decision on locking in a good rate has just gotten tougher for those who are ready to make a home purchase or looking to refinance to a better rate than their current one.

The start of 2014 offered 30-year mortgage rates of 4.53 percent for the average “prime” borrower seeking a Conventional Mortgage. These rates for highly qualified borrowers dropped lower and lower every month from January, up until August. What looked like a settling rate of 4.12 percent based on a weekly mortgage rate report put up by Freddie Mac was short lived. These small rate changes in the last three months made recorded history and are considered to be the smallest its ever been, 1.7 basis points per week, a translated 0.017 percent.

The increase of these rates happened so sudden that the Freddie Mac Rate Survey were caught off-guard and were unsuccessful of capturing the rapid incline. According to Freddie Mac, mortgage rates are near an average 4.12 percent at this time, but even higher in actuality.

Determining Mortgage Rates

The movement of rates have always been tricky to determine. However, most of us now know that the changes in the direction in which mortgage interest rates move everyday is tied to that of mortgage bonds. For those who are still not aware of this, mortgage bonds are very much similar to trading stocks.

The cause for this increase unfortunately was not for economic reasons, but based simply on momentum. This is the most challenging when it comes to determining rates for rate shoppers. This inclining trend may not stop here, there is a Federal Reserve meeting anticipated to take place sometime this week causing for analysts to believe that the Feds may be updating us on interest rate trends very soon. So what does the future of interest rates look like for next year? Assumably, rates may very well increase even more in the early parts of next year.

The theory surrounding the possible changes in mortgage interest rates are presumably based on how the economy is perceived by the Feds, if whether are not there is a need to ward off inflation at this time. The Federal Reserve Chairwoman, Janet Yellen is said to be hosting a press conference in regards to today’s economic standing and will answer all questions surrounding the Federal Reserve and topics discussed in the meetings sometime this Wednesday.

Many are expecting for rates to change again as early as after Wednesday’s press conference, whether is going to move up or down, the result is yet to come. one of the reason for an increase in rates may have been due to the decrease in activity between Russia and Ukraine, creating a change in the pattern of safe buying causing for trading to occur sooner than expected.