When refinancing their home or purchasing a residential or commercial property, everyone wants to make sure they get the lowest rates on the market. Trying to determine how interest rates will adjust can be tricky but treasury bonds provide a good indicator. Typically, when bond rates (also known as the bond yield) go up, interest rates go up as well. This is not to be confused with bond prices, which have an inverse relationship with interest rates. Watching what the Bond Market is doing can often help us gauge which direction rates will be moving.
Many consumers that were watching rates 1½ years ago remember when the 15 year was at 2.875% and the 30 year was at 3.125%. Since then, rates have gradually climbed. During the recession, the Fed lowered its short-term interest rate to near zero in order to stimulate the economy (they did this by purchasing mortgage backed securities). But then conditions improved considerably since the mortgage crash/economic recession from over 5 years ago. As the economic revival gained traction, it created a tailwind of new investors (to buy mortgage backed securities). This led to the government stepping back and allowing the Fed to allow mortgage rates to adjust accordingly to the market. Rates rose by almost 1% higher in 2014. But, we must remember that rates in the high-3s and mid-4s are still much lower then they were 6-7 years ago.
Mortgage rates have recently defied the odds and edged lower for the fifth consecutive week, even as some economic reports show that the U.S. economy is growing. The benchmark 30-year fixed-rate mortgage fell to 4.25 percent from 4.29 percent the previous week, according to the Bankrate.com national survey of large lenders. This continuous trend has provided a great opportunity for people looking to get a residential or commercial mortgage. This is also a prime time to consider a refinance that you may not have qualified for in the past, especially now that property values have begun to recover.If you are considering a refinance or a residential or commercial purchase, please contact me.
Stephanie Smith
NMLS# 1083107
860-335-9918
stephanie@northeast-mortgage.com
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