What’s up with mortgage rates? Jeff Lazerson of Mortgage Grader in Laguna Niguel gives us his take.
Rate news summary
From Freddie Mac’s weekly survey: The 30-year fixed rate averaged 3.90 percent, improving 1 basis point from last week’s 3.91 percent. Ditto for the 15-year fixed that averaged 3.17 percent, one basis point better than last week’s 3.16 percent. Thirty-year fixed rates have hovered at or below 4 percent for the past 10 weeks.
The Mortgage Bankers Association reported a fractional increase in loan application volume from the previous week.
Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $424,100 loan, last year’s rate of 3.56 percent and payment of $1,919 a month was $81 less than this week’s payment of $2,000.
What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages at zero cost: A 15-year at 3.25 percent, a 30-year at 3.875 percent, a 15-year agency high-balance (or loans from $424,100 to $636,150) at 3.875 percent, a 30-year agency high balance at 4.25 percent, a 15-year jumbo (or loan over $636,150at 4.25 percent and a 30-year jumbo at 4.375 percent.
What I think: When it comes to inflation, Federal Reserve Chairwoman Janet Yellen reminds me of Chicken Little.
Disregarding clear evidence that the U.S. economy lacks any real inflation threat, last week Yellen and company raised short-term interest rates. This is the fourth rate raise — all of which started in December 2015.
So, what’s the harm in raising rates? After all, Yellen is certainly to be admired for her love of country and her determination in stopping inflation from ruining our great American economic expansion of eight years and running.
The harm is that Yellen’s actions last week just put us precipitously closer to a recession that might not have been.
Markets are reacting as truth sayers. Consider the flattening yield curve. A flattening yield curve is when there is less than 100…