Mortgage rates hit a short term top at 5.59% and have fallen all the way back down to 5.3%. Are we going to see a support level at 5%?
The treasury rate increasing caused mortgage rates to make a very quick jump at the end of May and beginning of June. A move from 4.8% to 5.59% in three short weeks is almost unheard of, but that is exactly what we saw. For those individuals trying to refinance, it made things very difficult. Some borrowers had been waiting months to complete their mortgage applications and before they realized it, rates had jumped almost a full percentage point.
If rates continued on this volatile path, the housing market would have completely fallen apart for the short term. Luckily the 10 year treasury rate hit strong resistance at 4% and has fallen all the way back under 3.5%. The government stepping in and selling a boatload of treasury bonds definitely helped to push mortgage rates lower. The Federal Reserve Bank also stepped in and bought more mortgage backed securities which definitely helped to push overall rates back down near the 5% mark.
For anyone who has been thinking about going through the refinance process, now might be the time. If the 10 year hits the support level around 3.4%, which is also the 50 day moving average, then we are likely to see a strong bounce in both the treasury rate and overall interest rates. If you do not make the move to finish the mortgage application now, you may see 6% rate before it too long.
President Obama and Ben Bernanke are going to continue to do whatever it takes to put a bottom in the housing market. If that means making sure overall rates stay below 5.5%, they will definitely try, but will it work?
Subprime Blogger offers information on the lower mortgage rates that could save you money. Keeping up with the treasury rate could help you predict mortgage rates.
