Mortgage Rate increase is approaching!!!
Most people that don’t work in the mortgage market don’t have any idea how mortgage rates work. I would venture to say that a majority of the Realtors in the business don’t understand what it is that causes changes in mortgage rates from day to day or sometimes during the day (Don’t worry, you are not alone!). Most people, including a lot of Realtors, don’t know that the Federal Reserve Mortgage Backed Securities purchase program is about to come to an end. Your clients who are waiting to make a decision don’t know that rates will be going up, … soon, … sooner than they think! The FED MBS Purchase program is coming to an end by March 31st and they have been tapering off their purchases over the last few weeks. Once they stop buying, we will see rate increase. This video will be helpful to understand how & why rates change daily.
http://www.mortgagemarketguide.com/howratesmove.html
Increased rates in addition to increased costs, particularly on FHA loans effective 4/5/10, can have a substantial impact on their purchasing power. One of the FED Bank Presidents recently stated that he expects rate to increase roughly 3/4% once the FED Purchase program comes to an end. Now, initially that doesn’t sound good, but remember rates have been incredibly low, so even with a .75 rate increase, that still leaves rates under 6%. So get the word out!
Brian Witty
DFW Texas Mortgage