Rates are headed up now that the FED has announced they will begin to taper off their support of the treasury and mortgage backed securities market. Positive economic data has been steady enough recently to cause the change. This along with the increase in “G-Fees” that will hit rate sheets in January … will negatively impact rates going forward. The FED has used the purchase of mortgage-backed securities and treasuries to keep interest rates low. This has artificially propped up on prices and thus keeping Mortgage rates low for the last several years. While their taper of purchases is not huge, the signal it sends to the market is the FED support of the bond market will go away and rates will increase. Some good news is the non-Fannie/Freddie loan programs including jumbo loan programs and rates are becoming more significant and pricing is not all that different than the conventional lending ($417k – $625k) so that is a healthy trend looking forward. Overall rates up 1.0% – 1.25% from the historical lows and are right about where we were in September. The chart below reflects the pricing of mortgage backed bonds over the last year … lower bond pricing = higher yield, thus higher rates. Generally 30 year fixed conforming loan to $417,000 will be 4.625% (rate and APR) today with no origination or other charges. Up to $625,500 will be 4.750% (rate and APR) … Please give me a call about your situation and then I can be more specific.
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