Today has turned out to be a pretty quiet day for mortgage rates – a welcome relief in the context of recent volatility. In fact, “volatility” is the minimum. 2021 was one total defeat for long-term rates, even though 30-year fixed mortgages in the low to medium 3% range are historically excellent. This “historical context” argument is a good prospect for the casual observer, but little precious consolation for a potential borrower who saw rates of 2.75% a few months ago and believed in the exaggeration that they would continue to fall.
Borrowers seeking loans for investment properties and second homes are finding a increased drama supply as recent regulatory efforts have resulted in most lenders making major adjustments to the costs of these loans. In the worst case, it can cost more than 7 additional points to purchase an investment property as opposed to a primary residence. That’s $ 21k on a $ 300k loan …
Today’s top news it was the Federal Reserve’s official word that a temporary banking rule could expire at the end of the month. The rule applies to bank leverage and can affect the amount of securities held in certain banks. The bonds that banks can hold, the better for rates, if all other things are the same. Although it is not entirely clear how big the impact of this change will be, we can certainly attribute part of the recent rate hike to the anticipation of today’s movement. It remains to be seen whether this is sufficient to suggest that rates have found a ceiling. Many people bet against rising rates in recent weeks and quickly regretted it. The best bet is to watch, wait and be ready for change. The higher we go, the more likely it becomes.