If you're in the process of purchasing a home, or if you are simply a keen reader of financial news, you'll already know that mortgage rates have started to fall again recently.
After a prolonged upward journey since November's election, we've finally seen a slight reversal in what has been a quite steady, though by no means dramatic, climb.
The first thing to say is that this doesn't mean that rates won't be rising again very soon. Equally there is no certainty that they won't drop any further. We simply don't know.
What is clear, however, is that the increases we've seen until very recently have done nothing to reduce buyer sentiment. That's because, even though 30 year fixed rates were averaging 4.17% last month, that's still incredibly low in any historical context. Admittedly not as good as rates were during most of last year, but it's perfectly possible that we may never see those very low levels ever again, or at least for a very long time.
There's also a great deal of confidence in the economy and job prospects at the moment and many buyers are also not wasting any time in snapping up the right home, given today's widespread inventory shortages.
So why have rates fallen in the past couple of weeks against this backcloth?
Essentially, the stocks rally that had been in place since the presidential race ended has hit the buffers a little of late, due to concerns that growth strategy changes might not happen as quickly as originally expected.
Any rise in risk aversion usually favors bonds, the fortunes of which are very closely related to the mortgage rates available to us. Hence, we've seen a bit of a “safe haven” resurgence in bond interest just lately, plus the Federal Reserve has pleased bond investors by saying that it won't be aggressively raising short term interest rates, which have of course also risen recently (do remember that these are not directly related to the ups and downs of mortgage rates).
So when people ask what is going to happen to mortgage rates in the coming days and weeks, it's really not feasible to give a reliable answer, chiefly because the current situation can change so quickly. Stocks are trading higher today, for example, and if they find their feet again with more sustained growth, we may soon see rates regaining upward momentum as bond enthusiasm again diminishes.
My advice in situations such as the present one is to take the long term view that you're still able to obtain a home loan at rates that could only be dreamt of a few years ago. In other words, home ownership, or upgrading, remains an incredible opportunity, with no signs of any significant change to that mindset on the horizon.
As ever, don't hesitate to contact us if you have any specific questions regarding current real estate trends. We can also refer you to the best mortgage professionals in the area for specific guidance.