Low Mortgage Rates. Did you miss your opportunity?
Today I had the “pleasure” of calling several of my clients to let them know that the rate I quoted yesterday is now worse. In all cases, these clients each lost several thousand dollars in potential savings from not locking in a rate. A common denominator I noticed in my conversation with these clients is surprise. They seem taken off guard that rates actually went up. What I think many consumers forget is that mortgage rates can fluctuate similar to the stock market. Therefore it is not uncommon to see several rate changes in one day depending on market happenings. It’s true that the Fed has pumped $400 Billion more in to the bond market, specifically Mortgage Backed Securities (MBS) in an effort to keep rates low. However, that does not mean that mortgage rates are immune to fluctuations in the stock market.
Mortgage rates tend to fluctuate in unison with the yields on MBS. In general terms, when the stock market is doing well, investors will pull their money out of MBS thus driving up the yields on these investments. This in turn will push mortgage rates higher. When the stock market does poorly, as we saw last week, investors will seek the safety of bonds thus driving down the yields on MBS and push mortgage rates lower.
So, when should you lock a rate? I think that depends on each individual borrower. If locking in today’s rate is going to save you a tremendous amount of money over the life of your loan and put you in a better financial position, then it is probably wise to lock in that rate. If you hesitate and rates move higher, even slightly higher, it could mean that you cost yourself thousands of dollars in potential savings!
One thing is for certain. No one can predict where rates will be on a daily, weekly, or even a monthly basis. However, one thing is for certain. Today’s rates are absolutely the lowest they have been in history. There is a very good chance many of us will never live long enough to see rates this low again!
My advice… GET IT WHILE IT LASTS!
