Mortgage Industry Update

Well, it’s no secret that the mortgage rates and basis points adjustments have been up and down & all over the board.  They’re pretty much as volatile as the stock market these days.  If you haven’t yet been shown the connection, the stock market and bond market often move in opposite directions from each other. Why is that?

Well, because if you’ve got a lot of money, you might like to invest it.  If stocks are doing crappy, the 10 yr Bond market (which is closely tied with the rates you have available from any lender on any given day) might be a good place for you to invest it.

When stocks took another dive this morning following a services sector report that looked about as dismal as the manufacturing report from a bit ago.  Lots of people saw that as a sign it may be time to invest in something other than stocks (bonds).  So for the time being the bond market is the best it’s been since the middle of 2005. 

However; we’re all seeing the ups & downs of the stock market, the bond market, mortgage rates, unemployment, and new jobs.  Today I got an email update from one of the lenders we broker loans to at wholesale rates.  They are reacting to the volatility of all these economic indicators with a new restriction.

30 days.  You can’t lock your rate for more than 30 days, they’re telling us.  I believe this to be because they have no idea what will happen further out than 30 days.  With all the economic reports coming in significantly off the best estimation of financial experts, I can’t say I blame them.  It may well be that further than 30 days out, mortgage rates will be much higher than they are today.

What does that mean for you? If you’re looking at buying or refinancing, make sure you have your loan approved and your documentation together before you go looking for a home.  It may also mean that the banks lending money think rates will go up soon, so… if you’re going to do it, do it now!