Rate Update for Nov 13-17


On Tuesday Morning, the CPI Inflation came out and inflation dropped from 3.7% to 3.2%. 
Core inflation dropped from 4.1% to 4%.
This has had a major effect on Mortgage Interest Rates.
The Mortgage Backed Security market closed up a whopping 66 basis points at the closing bell on Tuesday.

So what does this mean? 
In my opinion, I believe we’ve seen the bottom of the barrel as it relates to mortgage rates and we’ll start to see (over time) the mortgage rates ease and come down.

Reminder this isn’t an overnight process. This means we’ll see days with gains in the Mortgage Backed Securities Market (good for rates) and it may be followed up by days with losses. The markets are never a straight line but overall if the gains outweigh the losses, we’ll see rates come down.

With the employment numbers coming back weaker on 11/3 and this week the Core Inflation (CPI) slowing, the Feds plan of slowing the economy (by raising the Fed Funds Rate) is starting to gain traction. 
Mortgage Rates have the tendency to shadow inflation. If inflation goes up, so do mortgage rates. The main way the Fed likes to slow inflation, is by slowing the entire economy. 

Check out this chart comparing mortgage rates and inflation:

 Here’s my rate sheet for this week. Overall the actual rates haven’t moved much, but the cost to get the rates went down which results in a lower APR. 

The rates below all have less than 1 Discount Point being charged. 


Should you wait until rates significantly trend down to buy? 

If you do, you might be doing yourself an injustice. Let me explain why. 

With the rates high, the pool of people willing to buy is much lower than when rates are lower.

Why does that matter? 
As a homebuyer, you’ll be competing against other homebuyers gunning for the same properties you’ll want to buy. The more competition, the sweeter the offers to the sellers of the house. The more competition there is, the less you’ll be able to negotiate.

For example check out the graph below showing sales with seller concessions. 
(seller concessions is a negotiable amount you can ask from the seller of the home to pay for some, or all of your closing costs. This can save you THOUSANDS out of pocket to buy.)

In the end, there are few arguments out there that actually prove now is a bad time to buy. Besides, you’re never stuck in a loan. Prepayment Penalties are a thing of the past, so as soon as rates drop, you can refinance and get out of the higher rate mortgage. 

If you’d like a free, NO OBLIGATION mortgage review, I’d be happy to help.

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