Up, Up and Away: Mortgage Rates Make a Run at 7-Month High

by Alex Stenback on May 23, 2007


A Quick Update:  Mortgage bond prices have deteriorated significantly in recent days, resulting in a rate spike of roughly .5% for most mortgage products.  This a level we have not seen since last fall.

As we mentioned in Monday’s Market Commentary, mortgage bond prices crossing a key technical demarcation (the Rubicon that is the 200 day moving average,) persistent inflation, an exuberant stock market, and a shift in sentiment in the bond trading world (yes, there is inflation, and yes, the Fed is serious about not cutting rates until inflation actually eases) made the prospect of higher rates a fairly high probablity occurence (which has now been borne out.)

Mortgage shoppers (that did not get the proper advice to lock in) now face an interesting dilemma: Try to catch the falling knife, or wait out the storm and hope for a bounce on what is now an oversold bond market.  (That last sentence mixed three metaphors in less than 25 words.  A new record!)

For perspective, (and to keep everyone from getting too hysterical) the graphic above (click = bigger) represents average mortgage rates since 1985.

{ 3 comments… read them below or add one }

Dan Green May 23, 2007 at 5:50 pm

Mixing metaphors is cool. Rapidly rising interests rates are not.

duane May 23, 2007 at 5:54 pm

the sky is falling!

Chuck May 23, 2007 at 8:21 pm

With outfits like Quicken Loans still offering Stated-Income, Negative-Amortization, or Interest-Only loans, does it matter?


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