You may have been noticing that rates have gone on a steady uphill diet of getting worse. This is not surprising if you look at trends over the last few years. Every year around this point rates have risen to their highest point in June and July. A few months back I was pleading with a few clients to refinance and they decided they wanted to wait and see if rates came down. Now that the 30 year mark is sitting at 6.25% or higher refinancing doesn’t make sense. If you are in a position of needing to refinance due to an A.R.M adjusting ask to do what is called a no cost refinance. This will allow for you to also refinance again when rates get lower and not pay the second set of fees to get a lower rate later in the year if rates dip again.
Most recently rates have gone up due to inflationary concerns over the European markets, and sky rocketing oil and food prices. As the cost of energy and food rises it causes more concern about inflation. If you follow my blogs you know that inflation is a bad word to mortgage bonds. The reason why? If you have a bond (note payable in the future, say 30 years like a mortgage) and there are inflationary concerns you are going to want a higher note (rate) on your bond to ensure that 30 years from now your return takes into consideration the time value of money. The answer is yes, you want to make sure your return paid out 30 years from now has the same value taking into account what a dollar would be worth at that time. In other words if you were paid out for your investment you would want your dollar to go as far 30 years from now as it would today.
If you need any questions answered about the state of rates as you look to buy a home or refinance your current home shoot me an email or call~