Mortgage Rates Rise

Copyright (c) 2009 Edward Ferrara

April 9th -The 30 year fixed mortgage rate went up for the first time since a month ago when the fed bought up a massive amount of long term treasuries to push rates down.

Mortgage Rates had been at a 50 year low since last week. That led to a spike in mortgage applications. The Fed has been pushing hard to help boost new home sales and the economy in general. Their boost to lending "should make new consumer, business, and mortgage loans more available, at lower cost," Bernanke said in Pheonix, AZ on March 20th while attending a banking conference. The Fed plans to buy up to 300 billion dollars of these long term treasuries, an all time high. Though home purchases, new homes mostly rose in February the median sales price was way down. Former mortgage broker and rate expert Bill Gates says this, "now is a great time to take advantage of the rates. Some big banks should be announcing unexpected profits and investors will take their money out of the safe havens and put it back into the market driving treasuries which move in the opposite direction of mortgage rates down and mortgage rates up." It's not easy to refinance now and the process can take longer than 30 days which is a standard lock period; therefore, it's a great idea to get working with your bank of choice now so that they can get a head start on underwriting. What happens a lot of times if a lender does not get a loan underwritten within the 30 days they charge the customer points to extend the rate lock. That causes all types of problems. I suggest floating the rate to begin and once the loan has been approved by an underwriter lock it at that time. That will put the odds in your favor that your loan will be funded before the 30 day rate lock expires. Appraisals have been an issue in most areas across the US due to the horrible housing market. If you can find a bank willing to pay for your appraisal that's the way to go. That way you avoid paying upwards of $350 for an appraisal that is no good as far as your mortgage lender is concerened".

If rates rise it will not be by much. Rate will not eclipse the 6 percent level for a long time. Too many US dollars are tied up in treasuries.


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Ed Ferrara is a former mortgage broker and Mortgage Rates expert. He also has a vast knowledge of FHA Rates.