The Next Fed Conundrum
Money Magazine: Interest Rates - The New Conundrum
It’s been a very interesting few weeks waiting for HUD to publish the area median home prices. Until the figures are published, conforming loan limits remain at $417,000. While we are waiting the interest rate markets have not lacked for excitement. After a very brief drop to the low 5% range in late January, rates surged into the mid 6%’s in less than a month. At that level, there’s not much benefit in higher loan limits as jumbo rates in the high 6’s have been available throughout the credit crunch.
Fortunately, we have seen another dip here over the last few days and rates are once again starting with a 5. If you are looking to take advantage of the higher loan limits or need to change the financing on your real estate for any reason, I strongly urge you to get a loan package going today. The rate markets are extremely volatile and opportunities to lock in at the bottom of the range are proving to be very short lived. Borrowers who were ready to take advantage in late January were rewarded with a 30 year fixed in the low 5’s. Those who chose to “think about it” found their window of opportunity closed.
I have attached an article explaining why Fed cuts don’t directly impact mortgage rates and often actually lead to higher rates in the short term. There is also a link to a Money magazine article discussing the Fed’s frustration with their inability to push long term borrowing rates lower. You can read both in a couple of minutes and it will give you a great understanding of the rate markets.