Tuesday, June 25, 2013

Interest Rate Bias Up Pattern is in Tact from 3/22/2013 Blog - Update

Back in March a pattern began to form foreshadowing the capitulation and inevitable rise in mortgage rates.  Anyone that asks what I think the market will do gets a similar answer "Mortgage Cycles are predictable if you know how to read the tea leaves; however, the timing is not quantifiable."

What is important to Consumers is the housing market is fantastic, values will continue to move up, employment is strong, and everyone is happy with their investments.  This amplifies consumers spending which stimulates the economy.

Rates will continue to move up so act on housing needs today and lock your rate as soon as possible.  The generational low in rates was a gift fueled by QE1 - QE3.  Today a consumer will trade a little higher rate for great appreciation in housing values driven by the lack of supply to meet demand.  Personally, I would take great appreciation over low rates any day.  Rates do not matter consumer need and consumer benefit does.

3/22/2013 Blog Post:

The chart below shows mortgage bond prices over the last six months.  Interest rates and bond prices have an inverse relationship – the lower the bond price, the higher the interest rate.  The chart shows that bond prices are fluctuating within a band that is declining thus the trend higher for rates.

Rates are trending higher so finding that home or taking advantage of refinance savings is becoming more time sensitive.



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