What’s Going On With Mortgage Rates?
“Mortgage Rate Increases Have Leveled Off Lately Too Cool Off The Market … At Least For Now”
Over the past several months all the residential and commercial mortgage rate increases and projections of more to come have pushed consumers and business owners into a mortgage shopping and mortgage rate following frenzy.
But in the last week or so, mortgage rates have back peddled a bit and the pressure has been let out of the balloon in terms of ongoing rate increases … at least for the moment.
I can understand this to some degree, but all the fundamentals and economic forecasts speak to rates more likely to go up than down in the coming months.
So if you’re in need of a new residential mortgage for whatever reason, it would still make sense to hold the course and try to get the best available deal in place versus waiting for rates to jump up again (which they are more likely to do than not right now) and start the frenzy all over again.
I guess part of the rationale for running hot and cold on rate shopping relates to trying to hit the market bang on so you are always paying the lowest possible rate. For the pure speculator that really focuses on the market and its rate movements, this is just the way they approach interest rate optimization.
But for most of the rest of the crowd, the logic doesn’t hold, at least not for me. During an obvious period of mortgage interest rate stability, it doesn’t really matter how you approach managing interest rate risk in that as rates go up a little or down a little, the gains and losses balance out.
However, when most of the signals that the markets are providing indicate rates going to higher levels, then it now becomes necessary to either do something about it or take your chances.
And while a small percentage of the market will lock in their rates at exactly the right time, most will not and end up paying more than they need to.
No one has a crystal ball with respect to mortgage interest rate movements. But if your cash flow is going to be highly sensitive to higher rates in the future, you may not want to play it too close to the vest when protecting yourself against rate increases, otherwise it could be too late.
My advise? Stay the course. If you need financing or you’re cash flow is rate sensitive, keep working through your options regardless if the rates are going slightly up or slightly down right now. If you can afford to be on the losing side of future rate increases, you may want to continue to speculate on the market.
About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel