Interest Rates Jump to 17 Week High
After an amazing 14 week run where interest rates stayed below 4% things changed last week. And that change was indeed significant. We had become complacent about what truly is the best time we will probably ever see to lock up long term mortgages. Well that slumber was jolted by an alarm clock last week and now we have to see if the Fed’s actions will be enough to make the snooze button operate. And if so, for how long.
As of this morning, the average overnight rate for a fixed 30-year mortgage as reported by Bankrate.com is at 4.03% up 15 basis points from where we stood seven days ago. The benchmark 15 year fixed rate is at 3.26% up 11 basis points from last weeks level while the benchmark 5/1 adjustable rate mortgage jumped to 2.88% from 2.75%. The chart above shows just how significant that jump was and we may look back on sub 4% rates as the “good old days”. The weeks jump was the largest we have seen in well over a year and brought us above the magic 4% number.
Some economists point to better economic data causing the jump while others point to the continuing fear of inflation. Whatever the reason we can hope the Fed is able to keep rates down as they truly are the lifeblood of the continuation of the Palm Beach County real estate recovery. Buyers and sellers remain in a stare down over prices as inventory levels have dried up in many market segments. Buyers remain price motivated while sellers with less competition feel there properties are worth more. Rising interest rates could end up costing them both.
Buyers who have been riding the fence thinking prices may go lower are playing a game of chance with interest rates. Thursday I sat with a client in a closing who bought a home they should be able to happily stay in for 15 years and secured a fixed 3.75% rate . I sat there so happy for them knowing they are a lucky couple with 2 small children who just closed on a deal that really was a “once in a lifetime” deal.
Hoping rates under 4% return this week but not confident. They may in fact be gone for good…………