Normally, mortgage rate used to come down in Nov and Dec period. But, this time, I see mortgage rate spiked suddenly this month. Checked various sites, bank rate, zillow…many sites all across rate hiked.
One blog even says this
Yes, it’s unusual that the rate moved on a government holiday.
As I’m writing, the yield on the US 10-year bond is around 2.2 percent. But interest rates have been rising significantly over the last few months.
The average 30-year mortgage is now going for around 3.77 percent. It was 3.49 percent just recently. The average 15-year mortgage is now 2.98 percent. It was 2.74 percent just recently.
Tomorrow it could go down, but it probably won’t. Why?
President-elect Donald Trump has promised to stimulate the economy through tax cuts and spending. If he succeeds, it will cost more to borrow money. And inflation will rise.
By just by trying to do this, Trump will cause the US government to borrow a lot more than it currently is. That demand for credit will cause everyone who is trying to borrow to pay more.
With this way rate is spiked, I have second thinking whether to pay off my 4.25% rate mortgage or not ! I am borrowing cash out refinance at 3.625% and planning to pay off 300k (4.25%) rental home mortgage.
As per my plan, rental home will be mortgage free, and my cash flow will be positive forever my life until I take any loan next.
If mortgage keep on going up around 5% or 6%, it is better for me to keep the 4.25% fixed 30 year. I am about to close my loan by next month and pay off 4.25% loan, but now confused very much.
I can simply use this money for some future purchase or investments as I feel mortgage rate increase will drive away some buyers out of race. That is the golden opportunity to buy another rental.
Yea, I locked in cash out refinance on my primary last week. I got 3.375 for 10/1 (75% LTV) compared to the quote 3.15 before Nov 8. Taking out as much as I could for next purchase (stock or real estate) in 2017.
Never pay off a loan at 4% interests rate any faster than absolutely necessary. If, in the future, banks pay 6% for deposits you will kick yourself.
I expect federal deficit to soar under Trump. He will spend money to buy popularity. So tax cuts, tariffs, and infrastructure spending. All are inflationary.
The irony is we’ve had 4 major tax cuts since WW2. GDP growth goes to above 4% every time and tax revenues increase. It’ll be interesting what happens with spending. If we were disciplined enough to hold spending flat, then the deficit would decrease and we may even get s surplus.
Hyperinflation, cost of running commercial REITs would go up and investors expect higher yield, hence REIT share price decline.
As for SFHs, hyperinflation should mean higher RE prices. So higher mortgage rate plus higher RE prices. More people can’t afford, hence have to rent. Bring it on, I’ll up my rent by 20% next year, mwah…
It was all pain, all the time for mortgage rates today. Since the election, the average conventional 30yr fixed rate has risen roughly 0.5%, putting November 2016 on a short list of 4 worst months in more than a decade. Two of those months were back to back amid the 2013 taper tantrum and the other was at the end of 2010. Let it be known that the recent surge in rates is more than a mere post-election knee-jerk. Financial markets are fully repricing their expectations of the future, and we can’t even begin to assess how that future might actually pan out until Trump takes office.
In other words, buckle up for a higher mortgage rate environment. Rates won’t necessarily be immune from good days over the next few months, but I certainly wouldn’t expect a quick, triumphant return to the promised land (rates from 2 weeks ago, and below) within the same time frame. The most prevalent conventional 30yr fixed rate quote is now 4.125% on top tier scenarios, and more than a few lenders are already up to 4.25%.
