More than a year ago when rates began to slowly move up after recent Federal Reserve comments indicated we can anticipate three and maybe four rate increases for 2018. That was based upon economic projections that indicated our economy was awakening from its extended slumber as job creation and the unemployment rate showed signs of life. Further, the Fed, as recently as last December, pronounced the fact that the FOMC will increase rates in 2019 at least two times. Okay, so here we are. And where are those rate increases the Fed told us about?
There are many who watched rates slowly rise last year with hopes of rates turning around and falling once again in order for a refinance to make sense. Or, first time buyers kept their fingers crossed hoping rates would fall to lower levels in order for them to qualify for the home they want. Again, that didn’t happen, and they all quit watching rates whatsoever, resigned to the notion that rates will never go back down again. Well guess what? Have you checked interest rates lately?
Just a few days ago it was announced that the average 30 year fixed rate fell to lows not seen in 15 months. In fact, on a week-to-week basis, the largest single rate drop as reported by mortgage giant Freddie Mac announced the one week drop was the most dramatic in a decade. While rates will move slightly on a daily basis, this one-week slide surprised a lot of people. People who get paid to know about such things.
It appeared that rates were soon heading to something closer to 4.50%, about where rates were one year ago, but now they could be moving closer to 4.00%. Is something in the 3.00% range on the horizon? Probably not and here’s why I think that. One of the primary economic reports the Fed pays attention to is the Unemployment Rate, more specifically the number of new jobs created. In March, there were 196,000 new jobs added. Not bad. But February also surprised with a paltry 20,000 new jobs, later revised to 33,000. That’s not good which put prognosticators on pause.
Analysts don’t like conflicting data but that’s exactly what we’ve been getting. During times of uncertainty, investors like to keep their money safe by moving money into bonds, including mortgage bonds. This back and forth of economic data is keeping mortgage rates in check and still near lows we haven’t seen in more than a year.
Okay, so what does this mean for you? It means that if you decided last fall that rates weren’t going any lower and dropped the notion of refinancing back then and you haven’t checked rates lately, you should call me for a rate update. Maybe you wanted a lower rate to lower your payments and pay less interest or perhaps you’ve got a 3/1 or 5/1 loan and it’s getting ready to adjust, if you’re going to refinance out of one of these loans at some point anyway you might want to take a serious look at refinancing now.
The economy is on a relatively stable footing with signs of rates moving up gradually. There’s nothing really out there that suggests the economy is slowing down in a big way, but there are signs the economy has been on a steady mend for quite some time. Don’t let this opportunity go unnoticed.