I have not seen this fast a rise in rates since around 2004. We have moved at least 3/8% to .5% since the holidays. Most of that the last 2-3 weeks. And I dont think we are finished moving but I never predict rates. Too many variables to account for.

I will opine on what is causing the rise. Basically rates are controlled by the general economy and inflation, which are sisters to each other. The economy is at his peak right now with most economists think 4% unemployment is "full employment". So employers are faced with paying more wages per unit to expand or even maintain their pool of employees.

The same factors are putting pressure on the inflation numbers. Last month the CPI, consumer price index, jumped from 2.5 to 3.5 and if that continues mortgages will have to absorb that 1% increase. We have not had over 3% CPI in a decade.

As we can see the stock market is taking a bath right now, 1600 point drop in the Dow in two days, and lots of that is fear of inflation and the Fed having to increase its rates to compensate for inflation by slowing the economy down. The Fed hates inflation and increasing borrowing costs is a sure way to cool off the economy.

As for rate costs, on a 200K loan the cost difference from 4.0 to 4.5 is 60 per month or 720 per year. We go to 5% double that additional costs.

This is not helping either

https://www.washingtonpost.com/news/wonk/wp/2018/02/03/the-u-s-government-is-set-to-borrow-nearly-1-trillion-this-year/?utm_term=.aca903d4cc3d

Bad timing for me. Scheduled to close on a construction to perm loan on the 28th and don't have the rate locked yet.

What do y'all think it's going to do? Continue rising?

Are you asking me? I do not predict rates. But if I was you and in your situation I'd lock as soon as I can. I like knowing what I got.

If you're a gambler have at it.

What ate the current rates on a 30 yr conventional right Now? Does buying points make sense now?

Market pricing today on a conventional loan... assuming:

740+ credit
25% down
Primary residence
Approved for conventional financing
Loan amount 200k plus
No points or discount

4.375% maybe.
4.5% more likely.

The above price is useless tomorrow morning

Oh and points do not help a buyer unless:

1. They make you approvable. Since points barely move the needle on Debt To Income, you would have to be a razor thin loan file. Not fun.

2. Will live there at least 5.5 years. And really more like ten years. AKA Coffen Home. The payback on any points is 65-68 months. So 5.5 years.

10 year treasury fell hard today. If that continues, you should see relief in mortgages.

10 year did not fall 'hard today'

It went from 2.85 to 2.79. It was 2.45ish mid December.

I am buying a new house in next couple months. FML.

Rough stuff. Im about a month out from finishing new construction. Can't wait for the inevitable.

SteveBott said:

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10 year did not fall 'hard today'

It went from 2.85 to 2.79. It was 2.45ish mid December.

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2.87 down to 2.65. Call it what you want but that's significant and a major reversal from the trend that's been in place. As I said, if it continues, you'll see relief.

I think this thread in general...could use some tums. I mean Relief!!! Relief!!!

Excuse me

http://money.cnn.com/data/markets

I watch this site hourly

bamdvm said:

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Bad timing for me. Scheduled to close on a construction to perm loan on the 28th and don't have the rate locked yet.

What do y'all think it's going to do? Continue rising?

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Yes. Will continue to rise.

The FOMC will raise overnight lending rates a full 1%, or more, before 2018 is finished.

Those raises translate to rises in the 2 Year and 10 Year Treasury. Bank Lenders like to use the 10 Year as a benchmark for 15 and 30 Year Mortgages.

If you are borrowing money, lock your rate.

If interest rates were normalized, today they would be 4.5% to 6.0%.

TXAGFAN said:

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I am buying a new house in next couple months. FML.

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As interest rates rise, the house price will eventually fall. As explained in the thread, what you pay per month goes up with higher rates; therefore, to afford what you want, it's either buy it with cash, buy a lesser priced home or wait.

Remember, interest rates are going up and your pay-check did not increase. Housing prices have to come down eventually to equilibrate with rising rates because pay-checks are a "certain sum" and how far can you stretch it? If housing prices stay the same, the buyer pool shrinks and days on the market number increases.

I'd move very slow for a purchase.

Hey Steve....been meaning to call you to discuss strategy including option(s) for rate lock.

So glad we locked our rate yesterday before it changes again

Whether or not paying points makes sense depends on the market the day you lock and what type loan program you choose. When the market is more settled than now you might be able to buy the rate down with a recapture period that's more reasonable than it is now. Right now it's not looking so good on the fixed rate products.

In an unsettled market there is more rate risk to the lender/investor in holding paper that's below market, hence the cost to buy down goes up.

We have a portfolio ARM product where 1 point buys 0.50% in rate so that pay back period is just 3 years.

Locked today at 4.625% (APR of 4.847%)

Ugh.

Hope I made the right decision...

This particular loan is a one time close construction to permanent financing where you close up front, have 12 months to build, only pay interest on what's been drawn during construction, and then it converts to permanent financing at the end of 12 months. They require a 1% rate lock fee at the beginning. Is that common?

What loan term did you use? Typically a one-time close is an ARM. Is the 4.625% with 1 point a 10/1 or something else?

It's a one time close, 12 month construction loan that converts to a conventional 30 year fixed rate mortgage after 12 months. The 4.625% is with no points. It's just the current rate.

You paid 1% to lock per your previous post so the net is 1 point on the deal. That rate seems high to me.

jja79 said:

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You paid 1% to lock per your previous post so the net is 1 point on the deal. That rate seems high to me.

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Seems high to me too! It went up on Friday AND again yesterday. Crazy...

I'd verify it's fixed after construction. Typically OTC isn't.

jja79 said:

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I'd verify it's fixed after construction. Typically OTC isn't.

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That's the purpose of the rate lock fee of 1%. Instead of buying down the rate, it locks it in the beginning to avoid risk of a higher rate at the end.

So what is the current 30 year fixed mortgage rate?

Can someone post what dates it increased and by how much? Is that even possible? I tried to search for it, but really didn't find anything clear.

We are debating to lock in a rate now or wait. We have been told we may want to want as it is very volatile right now and may want to wait for it to settle down. Does that make sense?

FYI, we are building a house, should be done 1st week of April, so we are right at 60 days away.

Thanks!!

this is nationally and one data point so not useful for actual rates, but the trend should be pretty accurate:

https://www.bloomberg.com/quote/ILM3NAVG:IND

So it went down a little today? So on 2/2 it was at 4.3 and now today it shows 4.25? Am I reading that right?

I don't see a price for today. Looks like it dropped a tad yesterday.

Again, this is purely intended for a macro look at things. I don't know how relevant it is to actual market conditions.

The bankers could tell you more.

The problem with that Bloomberg graph is it does not explain the data behind it. For example the weekly Freddie mac survey is often used in reports and those reusing it almost never state it is a rate that had a half of a point paid. So it always is slightly lower then my rate.

So Steve, what is the current rate. If you were in my shoes or giving me advice, would you say lock in now (60 days out) or wait until it settles down a bit, which is the advice the lender gave us this AM.

TIA!

On a 60 day out with either less then 220% down or more then 25% down I would quote 4.375% no points.

that is a little skinny on my part but it fooking February and every deal is a good one right now.

But I do things a little different then most lender. I lock at 60 but if the market goes down I will flip you to new lender or renegotiate with the existing one. You have a 30 day window for that on a 60 day lock. If rates go up, sit tight. When I say go down it needs to be worth it and not just pocket change. I have a duty to my lenders to deliver the loan when I can.