Interest Rates have been great, and still at historic lows, but over the past couple weeks we’ve been seeing a slow trickling up of the rates. Some of the increase in rates is because of the calming of geo political tensions. Russia has been behaving over the past week and there’s been less of a flight to the safety of bonds and mortgage backed securities.
Lets take a look at a chart of the 10 year treasury. It’s direction most closely correlates with 30 year mortgage rates.
Over the past few days you can see how rates have been popping up daily.
Compared to the beginning of the year rates are still low. If we look at it from the technical side, we’ve gone through the 2.50% level. If that level is not seen as resistance, and the rates don’t back off, there’s a lot of support at 2.6%. So we’ll potentially see another 1/8% increase over the ¼% increase we’ve seen over the past couple weeks. There’s a lot of resistance at 2.8%, which could add another ¼% to the rate.
There’s no real catalyst for the direction of rates. There’s conflicting economic information, and a Federal Reserve statement next week, that may have an effect.
When interest rates increase many real estate buyers get off the fence and buy. The big problem we have, real estate values jumped up substantially have over the past few years because of the foreign and hedge fund investors. The wage growth has not kept up with the real estate inflation and the new mortgage regulations makes credit availability tighter. Also the FHA increased their mortgage insurance premiums substantially making it harder for first time buyers to qualify. Real Estate is still moving. Inventory is up, and this winter can be interesting.
Specialist in the Art of Real Estate Sales and Finance
Ron Henderson GRI, RECS, CIAS
Multi Real Estate Services, Inc
Gov’t Affairs Chair – California Association of Mortgage Professionals