There has been a lot of press speculation this week about whether or not mortgage rates are about to rise more steadily than we have seen for some time.
Following some very strong employment statistics and manufacturing/construction data this week, rates rose a little, as they always do when positive statements about the health of the economy are forthcoming, with investors tempering their enthusiasm for purchasing mortgage backed securities, as a direct result.
Press comment has largely been driven by noise emanating from The Federal Reserve that rates might possibly rise more steadily soon, if certain market conditions persist.
When looking at mortgage rates, it's important to retain a very global view of the situation. At around 4% for a 30 year home loan, rates are still historically extremely low and, indeed, still modest even when compared with more recent statistics.
Last week rates were down, this week they're up a little. It's a cyclical trend we've been seeing for a long while. Economic news fluctuates between good and not so good and, of course, the press is always looking for a sensational headline, distorting the true picture.
As we've often said in this blog, rates will eventually and inevitably rise away from the incredibly low rates we've been seeing. That rise, however, should be very gradual when it does happen, so it's very unlikely we will all suddenly wake up one morning and buying a home will have become significantly less attractive than at present.
The Fed will, of course, want to do everything it can to retain the momentum in the housing market, which has been bouncing back so strongly, as we've reported in our regular blog snapshots of what's happening in the Albuquerque area.
When rates rise a little and there are headlines like the ones we've seen this week, there is always a tendency to consider waiting until they drop again. That is something that has worked well for home buyers in the past couple of years because they've always gone back down once more. At some point, and it may or may not be right now, that's going to be an old trick that no longer works quite so well.
The underlying trend at the moment is that rates are rising very slowly but quite steadily, with the odd u-turn back down again. Therefore it's probably the best advice to consider that they are still incredibly low in the grand scheme of things and, if anything, should be encouraging potential buyers to get pre-approved for a mortgage and get a rate locked in.
Given the other incentives in the market right now, such as very sensible home pricing and low down payments for qualifying buyers, there are so many reasons to move forward with your house purchase. If you're a seller, it's still a perfect storm of buyer sentiment you simply cannot afford to ignore.
Call us today for an informal chat about current market trends related to your own situation.