The 30 Year Conventional mortgage rate has moved above 5% from a low of 4.250% a few weeks ago and the 15 Year Conventional rate is above 4% for the first time since the end of July. This is attributable to many things (read my 'Mortgage Rates Make A Move' post from December 3). Also, economic news in the last few days has brought market concerns over stronger economic growth that could lead to an increase in inflation. This has added fuel to the fire in the rise in mortgage rates.
This is a very strong move in just a few days to say the least. It looks like the bond market is VERY oversold at the moment. I still think rates will dip again in late January or mid February when bargain buyers enter the market. Do I think we will see a 30 Year at 4.250% again? No. I do think we could see 4.500% though.
There are definitely a lot of people who missed the opportunity to refinance. When mortgage rates are at or near record lows for so long people seem to get complacent that the rates will continue to stay low. The bottom line is those looking to refinance are late to the party at this point and may have to wait a few months. When and if rates drop they need to lock immediately!
Those looking to purchase a home should not delay based on higher rates. What should be most important to potential buyers is whether they have a job, are confident they’ll keep it and are sure that the home is affordable to them. Not only will rates probably increase later in 2011 underwriting will also become more stringent. Those who qualify for a mortgage today may not qualify in a few months. Rates are still at great levels and it is a Buyers market.
