Mortgage interest rates are jumping faster than gas prices. Everyone who was waiting on the “bottom” to buy a home has now missed that window. Rates have increased nearly 3/4% in the last three weeks. And they will continue to increase, so anyone planning on buying a home in the near future should begin looking now.
So why are the rates increasing so quickly? The answer is both complex – and simple. The money for mortgages is a supply-and-demand function of the bond market. When investors become more confident in the stock market, and expect better returns from stocks, they cash out the money they have in bonds and move it to stocks. In order to compete for “investor dollars,” the bond market has to increase the interest rates that they pay to bond investors. Since mortgages are directly funded through bonds, an increase in the interest paid by bonds passes directly through to lenders – and eventually to buyers – in the interest rates paid for mortgages.
Compounding this problem is the amount of mortgage dollars funded in May. There are a lot of mortgages available in the marketplace for investors – and not enough investment dollars available to buy them all up.
So if you are on the fence about buying a new home, it is time to make a decision. Interest rates will continue to increase – they may be over 6% by July 1st. And home prices are starting to creep upwards in the lower price segment of the market place – homes under $250,000. The longer a buyer waits, the more expensive the purchase will become.
Tags: Bond Investors, Home Buyer
Avg. Sales Price: $1
Avg. Days on Market: 1
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Mortgage interest rates are jumping faster than gas prices. Everyone who was waiting on the “ [...]…