If you’re thinking about buying a home, then you’re probably not going to like what I’m about to say. On Friday, while you were busy nursing yourself back to life following the previous night’s celebrations, mortgage rates exploded.
The daily recap from a widely followed mortgage industry publication characterized it as a “catastrophic surge,” saying: “today’s rise in mortgage rates is among the largest ever, and certainly the largest in the past 10 years. Today alone, rates rose more than most entire weeks.”
According to its estimates, the rate on a conventional 30-year fixed rate mortgage “moved forcefully into 4.75% territory, with some lenders at 4.875%.”
But wait a second. Didn’t Freddie Mac just announce on Wednesday that rates had fallen? What could have happened in the meantime to cause them to take flight?
The answer is this: Friday’s better-than-expected jobs report for June. As my colleague Morgan Housel noted, “Bad news for the end-of-the-world crowd: June’s jobs report was released Friday, and it was pretty good. 195,000 new jobs were created last month, according to the Bureau of Labor Statistics. That was the third-best June jobs report in the last 15 years.”
The connection between mortgage rates and job creation is the Federal Reserve. That is, as the labor market picks up, the central bank will begin to reduce its support for the economy. And because its support for the economy consists, in large part, of bond purchases, its retreat will result in higher interest rates.
All things considered, in turn, if you’re a prospective homeowner, it might behoove you to act on your inclination to buy a house sooner rather than later, as there’s reason to believe that this trend could very well continue.
Happy Summer Time!
If you’re thinking about buying a home, then you’re probably not going to like what I’m about to say. On Friday, while you were busy nursing yourself back to life following the previous night’s celebrations, mortgage rates exploded.
The daily recap from a widely followed mortgage industry publication characterized it as a “catastrophic surge,” saying: “today’s rise in mortgage rates is among the largest ever, and certainly the largest in the past 10 years. Today alone, rates rose more than most entire weeks.”
According to its estimates, the rate on a conventional 30-year fixed rate mortgage “moved forcefully into 4.75% territory, with some lenders at 4.875%.”
But wait a second. Didn’t Freddie Mac just announce on Wednesday that rates had fallen? What could have happened in the meantime to cause them to take flight?
The answer is this: Friday’s better-than-expected jobs report for June. As my colleague Morgan Housel noted, “Bad news for the end-of-the-world crowd: June’s jobs report was released Friday, and it was pretty good. 195,000 new jobs were created last month, according to the Bureau of Labor Statistics. That was the third-best June jobs report in the last 15 years.”
The connection between mortgage rates and job creation is the Federal Reserve. That is, as the labor market picks up, the central bank will begin to reduce its support for the economy. And because its support for the economy consists, in large part, of bond purchases, its retreat will result in higher interest rates.
All things considered, in turn, if you’re a prospective homeowner, it might behoove you to act on your inclination to buy a house sooner rather than later, as there’s reason to believe that this trend could very well continue.
Happy Summer Time!
Inventory is low here in the Palm Springs Valley and I have qualified buyers waiting for their choice of a home, to become available. The Mortgage rates, though they did increase, are still at historical lows..it’s a good time to be a Seller!