Mortgage Rates in a Downward Trend. Can it Last?

Filed under: Market Comentary

I want to talk about rates today. Rates have been so great for a while that it seems like we are used to the low numbers that we’ve been seeing for some time.

Interest Rate Trends So Far in 2021

They have been coming up, with a significant run up in February. At that point it made sense because there were inflation and economy concerns.

Now, here we are 6 months later. We’ve been in a downward trend with rates trickling in the right direction (down). Yields on 10-year treasuries are coming downs, mortgage bonds are going up (causing the rates to come down).

Why is This Happening?

From a mortgage perspective, inflation is the top concern that will drive rates up. We are seeing inflation reads coming in that are the highest in 30 years.

What does it mean for us? I don’t know what to say – it is confusing. I’ve talked to a few people to get their opinions and most people think it’s related to the turmoil happening throughout the world. The US bonds still look better than most bonds throughout the world.

But, at some point, this inflation is going to become a problem and it will need to have a day of reconciling.

What Do We Do About It?

Here’s what I do know: if you are thinking about buying a home or refinancing, it’s still a great time because of the low rates. Dive in and take advantage while it’s available.

If you are considering a refinance, it probably makes sense to make this change if you are in the 3% interest rate range. We may even be able to get rid of your mortgage insurance if you bought with less than 20% down. I’m doing a lot of those deals right now!

It also makes sense on the purchase side. Remember that a 1% decrease in the interest rate equals 10% higher purchasing power.

Don’t ignore that rates are still down – it’s a great time to take advantage of the opportunity. Talk to me about your situation. We’ll crunch some numbers and see what works for your home purchase or refinance.

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