Interest Rates Make Another Big Move Higher

Interest Rates Spike 15% in Less Than 4 Weeks

The upward run in interest rates over the past 4 weeks has been something to watch. Sitting near an all time low at 3.42%, for the average overnight rate on a conventional 30 year fixed mortgage on May 5th, the environment has changed. As of this morning that rate has jumped an amazing 15% to 3.94% and the highest level we have seen since April 8, 2012.

Interest Rates

In a market where there is a shortage of inventory and buyers are scrambling for each well priced new listing prices are rising. But those borrowing will find that they now qualify for a smaller loan. If a buyer’s credit and ratios allowed them to qualify for a principal and interest payment of $1,000 per month they could afford a $225,000 mortgage back at the beginning of the month. This morning they wake up to find that they now only qualify for a mortgage of $211,000.

The reaction to our recent treasury bond sales has been tepid with investors in our debt demanding higher returns. Couple this with the Fed’s remarks that they are considering easing monthly purchases of out debt and you see the results. The Fed through their quantitative easing programs has purchased an amazing 3 trillion dollars of our paper and add another 85 billion each and every month. If the Fed isn’t buying this paper someone else has to and we are seeing the potential results unfold over the past few weeks in the movement of interest rates.

Rates have been held at artificially low levels by the Fed’s programs in an effort to encourage borrowing and to accelerate growth in the economy. Perhaps the 3 trillion dollar mark has the Fed and it’s members more than a bit worried. Perhaps they are just trying to see how the market will react if they in fact decide to ease their debt purchases. Borrowers have been spoiled for rates that have been, and still are, historically low and where we go from here will be of great interest to the real estate market and the recovery that has been the driving force in the economic recovery.

It’s always something……..


Published by

Tom Priester

After spending years among the top individual performers at one of Palm Beach County’s largest and most successful real estate brokerages, Tom Priester knew there was another way to do real estate. A better way. Real estate services focused on the customer. Like the old days when the customer truly was #1. He tired of listening to why he should be going out to have his customers sign one sided buyers’ brokerage agreements. He tired of hearing how he should be selling customers why paying higher commissions, like 7% and 8%, was to their benefit. He tired of hearing how he should sell his clients on why they should be paying hundreds of dollars in additional “transaction fees”. The business had slid way too far from being focused on the customer. His customer. So he decided the time was right to be different… design. To start his own unique boutique real estate firm truly focused on his customers. They will now have access to a process focused on them. Only the best marketing techniques to sell their homes. No cutting corners. Commission structures based on his clients needs not his. Paradise Sharks was born out of Tom’s passion to return this business to the customer. Where it belongs. If you want a real estate experience that benefits you, just give Tom a call at 561 308-0175 or send him an e-mail at You can always pay more and receive less but that just would not make any sense. Would it?

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s