I am getting worried…
…about mortgage rates permanently increasing. Over the last month, including the Christmas season, mortgage interest rates have been steadily on the rise. Mortgage Bonds are trading lower once again this morning. However, this doesn’t come as too much of a surprise, as we have been discussing the inevitable move higher in rates. The Fed is buying less mortgage bonds, and this will be the policy for the next 3 months, at which point they have indicated that they will stop buying altogether.
With demand for mortgage backed securities dipping in the face of the reduced Fed purchases, one can only assume that rates will get even worse when they stop buying. Last week they purchased $15B in Mortgage Backed Securities, which has been pretty average for a couple of months now – significantly less than the $20 – 25B per week they were purchasing a few months ago.
It takes about 4 months for new mortgage loan originations to hit the securities market. With the extension of the home buyers tax credit, this means that increased volume is about to hit, and put further downward pressure on the Mortgage Backed Securities.
My advise – if you are thinking seriously about refinancing at a great interest rate, the window of opportunity is soon over. Don’t keep waiting for rates to drop further. Chances of that are more remote compared to the chances of a significant increase. You are welcome to call me if you are wondering whether it is the right situation for you to consider a refinance. Remember, refinancing is expensive, and you need to make sure that the benefits outweigh the costs. I can be reached at 801-450-4786.
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