As can be seen in the chart of the 10 year note interest rates, the long-term yields of the interest curve have been trickling up over the past week. This is the part of the curve that has an effect on 30 year fixed mortgage rates. The secondary money market is looking at the economy picking up, and the potential of inflation being pushed up because of the $10 Trillion in fiscal stimulus from the gov’t to compensate for the COVID negative effect.
I still hear some confusion from clients because they heard “the Federal Reserve is keeping rates low till 2023”. The Fed Funds Rate has little effect on mortgage rates. The secondary market will generally determine the long side of the rates. BUT presently the Fed is also keeping mortgage rates artificially low by using Quantitative Easing (QE) and buying bonds and mortgage backed securities.
If you know the Fed, they’ll scale back on the QE before they increase the Fed Funds Rate. That will happen well before 2023, allowing mortgage rates to rise up to a standard market level.
Another element just now kicking in is the new .5 point Freddie Fannie “Adverse Market Fee” (tax). That equates to around another 1/4% on the interest rate. It is starting to be priced into the rates by the lenders.
Timing is everything! Call me if interested in crunching numbers and evaluating refinancing or purchase money options
If you are in the Los Angeles area, have any questions or real estate sales or financing needs, feel free in contacting me
Ron Henderson GRI, RECS, CIAS
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – California Association of Mortgage Professionals (2017-2018)
Chairman – OutWest Marketing Meeting (Real Estate Education)
BRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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