Mortgage interest rates have been very volatile over the last couple of weeks. We haven't seen a huge increase but one day they improve slightly, the next they tend to get a little worse! Overall, they have increased slightly over the last couple of weeks.
Investors have been waiting to see what happens regarding the debt ceiling limits and whether Congress passes a bill to cut spending. The big concern is what happens if they don't raise the debt ceiling limit before August 2nd. No one is quite sure, but the rumor mill is that mortgage rates will jump. We aren't sure how much or how fast, but there is a good chance that will happen.
The other concern is that if Congress passes a bill to raise the debt ceiling without cutting some spending, the US may lose it's AAA credit rating and that will also cause interest rates to increase quickly.
This week there have been treasury auctions and Wednesday's 5 year note auction did not go as well as investors had hoped. There was also a report showing economic activity had slowed for June and early July. The consumer confidence report on Tuesday was slightly better than expected for last month.
If you are thinking about refinancing, this is the week to think about locking in your interest rate. If you are buying a home and haven't locked in your interest rate, this is also the week to think about that. We don't know what will happen next week, but we do know where interest rates are right now. When it comes to locking in an interest rate, there are three possibilities – rates get worse, rates get better or they stay the same. Given that interest rates are near the lowest we have seen, it makes sense to play it safe. Rates are more likely to increase than decrease. However, having said that, you never know exactly how the mortgage market will react and which way rates will go until they have already moved!!!
Leslie Vanderwerf, NMLS ID#335509, Advisors Mortgage - Email – Website
