Have you been following interest rates lately? They have been all over – but unfortunately mostly up. We expected rates to increase this year, but you always hope it will be very slowly!! So what is going on this week?
This week’s financial reports weren’t as important as last week’s, but political news like the Iran arms deal, trade wars, and relations with North Korea will continue to influence markets. This week’s reports of housing starts, retail sales, industrial production really isn’t affecting rates too much – it’s more the political news that has investors concerned.
On Wednesday, the major stock indexes opened flat which is neutral for mortgage rates. Gold prices fell hard which hurts mortgage interest rates. Gold tends to rise when investors worry about the economy and worried investors tend to push rates lower. Oil prices remained at $71 a barrel, which is neutral -but oil was under $50 a barrel seven months ago. I noticed that increase when I went to the gas station this week!! Gas prices have jumped along with interest rates!
CNN Money’s Fear and Greed Index dropped 4 points to 52 (out of 100). This is still a neutral range. If the index moves into a more “fearful” state, it usually means interest rates will drop. “Fearful” investors typically push bond prices up, which means interest rates drop as they are leaving the stock market and moving into bonds. When investors are concerned about the economy, they will buy bonds – that helps interest rates. When they are “greedy”, they are moving into the stock market and out of bonds- that means interest rates are going up typically!
So what does this mean for you as a home buyer? If you are closing on a home soon, you should probably lock in your interest rate. There is no way any of us know for sure what is going to happen, but we do know that interest rates have been rising. If this continues and you are not locked into your interest rate, it could affect your mortgage approval. Talk to your loan officer or call me to get a mortgage quote- remember that as rates increase, your payment goes up and if you are buying at the top of your comfort range, you may want to lower your sales price if possible. Remember what your loan approval is for and even though we tell you a sales price, it’s truly a mortgage payment. That means as rates increase, the sales price may have to drop to keep your approval valid! The best thing you can do as you are shopping for a home is to stay in touch with your loan officer.
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, Inc., An Equal Housing Lender, NMLS#150953 – Email – Website