Mortgage rates are at a
two-year high, as the stock market sorts out how to deal with QE3 tapering.
There is consensus about the direction of rates from the mortgage brokers I work with, anticipating rates on 30-yr fixed mortgages approaching 5% by year’s end.
Most do not see rates over 5%, though.
And importantly, none of these brokers seem to be overly dark and bearish on the rates affecting the velocity of borrowing.
All are seeing choppy, sideways trading
affecting rates
until the economy
stabilizes.
This 5% ceiling seems to be the normal for now.
So the window of opportunity is open for locking into low rates, not closing just yet.
Window for Mortgage Rates
There is a direct correlation between economic improvement and rates, of course.
As the economy improves, and as the Fed intervention dissipates, rates will increase for borrowers.
Will this rising tide raise all boats?
One mortgage
broker called this “the last good days for rates,” which seems more than a bit overwrought.
Let’s revisit the recent past.
Yes, these rates will almost certainly not been seen again in my lifetime, where they went nearly to 2%.
However, rates were still 1.5-3% higher from 2003-2008 than they are now.
We are still in a lovely borrowing environment and rates are still historically low.
30 year 4.5%
10 year ARM
3.75%
7 year ARM 3.375%
5 year ARM 2.875%
I’ll touch on the big picture in another post.