Mortgage markets worsened in California last week as Wall Street came to terms with the expanding economy; and realized the Federal Reserve may be trying to induce inflation.
Mortgage rates for the Inland Empire rose for the 4th time in 5 weeks last week, extending a losing streak which dates back 4 months.
Today, fixed, conforming rates are three-quarters of a percent higher as compared to the market’s low point, November 3, 2010. For a $200,000 home loan, that size rate hike equates to an increase in a monthly mortgage payment of $89 per month.
Mortgage rates are at their highest levels of the year and, this week, they may continue ticking higher.
There isn’t much data set for release this week so markets will take their cues from two major events — one economic and one political.
The major economic event is Fed Chairman Ben Bernanke’s testimony to the House Budget Committee late-Wednesday. Chairman Bernanke is expected to speak about employment, but will likely touch on other topics of import including economic growth, the U.S. dollar, and the nation’s debt ceiling.
The Fed Chairman’s comments will move mortgage rates in one direction or the other, so locking in advance of his testimony may be prudent. Mortgage rates have more room to rise than to fall, after all.
The second major event is Egypt’s ongoing political strife. By Thursday of last week, Wall Street had shrugged off the region’s crisis and unwound the safe-haven trades that had helped mortgage rates during the week prior.
If instability returns, mortgage rates, once again, will be pressured lower.
Regardless of your rate-locking plan for this week, it’s important to recognize that, although rates have risen, they’re still well below historical average. Therefore, rates may have a lot of room to move higher, still.
If you’re shopping for a mortgage or under contract to purchase and want a lender who will help you lock in the lowest rate possible, consider locking your rate as soon as possible and give me a call at (951) 215-6119.