Seattle Mortgage Rates Today, June 8, 2009
Second week of mortgage rates increasing, how high will mortgage rates go and will they come back down?
A concern that homeowners across the country continue to ask. Leading economic indicators out this week fueling the fire of the economy recovering, Retail Sales, Consumer Sentiment, Building Permits, Housing Starts all due out with signs of positive momentum. With the recession predicted to end by the end of the summer season rates are poised for a possible increase. What is really causing for rates to increase you ask? Almost on a weekly basis for the next month there are bond roll overs occurring, what is the significance of this? The Federal Reserve has set aside a massive $1.2 trillion to be used to purchase mortgage back securities, but with the amount of bonds currently coming up for auction there is not enough demand to meet the supply triggering yields on bonds to rise. Reflecting on mortgage rates to also increase with the bonds. If you were able to see the past two years of bond performance you will see a cycle of bond roll overs and a increase in mortgage rates. BUT, here is the but, we were not in the economic environment we are in currently. A big question looms over the United States if we will be able to repay our debt we have issued. A question that was asked last week to Timothy Geithner in China when he visited and was not met with open arms when he responded. So now the question turns to how high will yields on bonds go?
Media and Wall Street are waiting for words of the future from the Federal Reserve and Ben Bernanke later this month.
Mark your calendars for a wild ride which will begin June 23rd and 24th, Fed Chairmen, “Big Ben” will give his testimonial of the outcome of the first half of the year and its stance on increase the short term rate for the first time. Home Equity Line of Credit holders get ready as this could set the tone for the rest of 2009 moving forward on rates moving back up. Signs of the inevitable inflation concerns that are in the future of the United States.
It is very important to keep a perspective on the change in the economy, as more optimism builds about the recession ending and the long road to recovery rates will be pressured higher not lower. There will be bumps in the road as a possible “double dip recession” may occur later this year. This would the best time for home owners to secure a lower interest rate before the so called “refi boom” ends.
Timing will be key.
It is imperative if you are looking to refinance to get your application in, have the loan fully approved and wait for the rates to have a day which falls in your favor with lower rates. Why do this? Lets look at volume of a lender. When rates fall applications spike and in turn underwriting turn times get blown out. Some banks are currently out as far as FIVE MONTHS…. yes 5! By having your loan fully submitted and floating the interest rate you will be fully ready to secure the rate when the timing is right. By far the best strategy and position to be in.
Most importantly you need to work with a mortgage professional who understands the timing and what is impacting rates! Timing, timing, timing as we here in Real Estate, location, location, location.