The economy is resuming. Americans return to travel, eat out, go to the cinema and ball games.
But if you expect a strong recovery to lead to a sharp rise in mortgage rates, think again.
On Thursday, 10-year Treasury rates (a carefully monitored indicator and a major benchmark for mortgage rates) fell below 1.46 percent. Prior to the recent withdrawal, government bond yields rose to 1.69 percent in May.
The Treasury yield decline came after new reports showed that the US trade deficit had reached record levels. For mortgage borrowers, lower Treasury yields can lead to lower mortgage rates. As a rule of thumb, the 10-year Treasury is 150-200 basis points above the 30-year mortgage rate.
Greg McBride, Chief Financial Analyst at Bankrate, said: “One day Treasury yield pullbacks mean that lenders often change prices that day and borrowers get better rate quotes within hours. Treasury yields go down. It’s a good time for borrowers to fix interest rates as the week begins. “
Mortgage buyer Freddie Mac said Thursday that the average 30-year interest rate loan fell from 2.99% last week to 2.96%.
Interest rates on 15-year loans, which are popular for refinancing mortgages, fell from 2.27% last week to 2.23%.
According to the Ministry of Labor, consumer prices rose the fastest since 2008 in May, according to the latest economic news. The consumer price index in May rose 5% year-on-year.
Another inflation index, which excludes volatile food and energy costs, rose 3.8% year-on-year, the fastest pace since 1992.
In addition, the government reported last week that the number of Americans seeking unemployment benefits fell to 376,000 for the sixth straight week. This is the lowest value for a new pandemic.
Sam Carter, Freddie Mac’s Chief Economist, said: “But housing prices haven’t weakened yet as prices continue to stay high due to inventory shortages.”
The Treasury yield reversal is just the latest curve ball thrown by the economy. Mortgage experts expect mortgage rates to continue to rise this year, said Joel Narov, head of Narov Economics.
“There is little reason for government bonds to decline,” Narov said. “Inflation hasn’t disappeared, growth is strong, and the economy has just begun to fully resume. The Treasury’s interest rates are expected to recover, so the decline in mortgage rates could be temporary. “
What you can do to ensure a smooth and profitable refinancing
Mortgage rates have risen from their all-time lows set in January, but there is still time to refinance mortgages. Here are three professional tips:
• Shop: The best deal goes to the borrower to compare mortgage offers. You can save thousands of dollars over the entire term of your loan by getting at least three quotes.
• Consider rate locks: Lenders typically extend rate locks for 30-60 days. This means that if the rate goes up before the loan ends, you don’t have to pay any more. However, these are not normal times and many refinancings do not end within 30-60 days, so make sure your lender is prepared to extend the rate lock if the transaction is delayed.
• Keep Your Credit Score Tight: It’s not time to miss a payment, take on a new debt, or do anything else to lower your credit score. Lenders are particularly strict about the borrower’s credit history.
Bankrate, The New York Times, The Associated Press contributed to this report.
Why are mortgage rates down with inflation up? – Orange County Register Source link Why are mortgage rates down with inflation up? – Orange County Register