I just received this great bit of information from one of my trusted local lenders, Darlena Marmins, regarding interest rates. It is great information to be aware of and remember that interest rates are key to your overall purchasing power.
“Financial Volatility After the Election”
It appears that everyone, including the financial markets are glad that the election is over. The volatility that we have been seeing was not limited to the equity markets, as long-term interest rates also spiked sharply. The mortgage backed securities suffered a 300 basis point decline in just three trading days. This recent damage will not likely be able to be recovered in the near term. To put this in perspective a 30 yr fixed rate increased from 3.625% to 4.0% in those same three days.
The question is–where do the markets go from here? The calendar does not change. We still have another employment report to be released in early December and a meeting of the Federal Reserve Board’s Open Market Committee afterwards. It is expected by the markets that the Fed will raise its benchmark interest rate by 0.25% in December. Any larger move would be a surprise, which could rile the markets. But a 0.25% increase should be expected and probably will not provide much mayhem in this regard. This is especially true if the recent rise in long-term rates holds. In this case, we would definitely think that the market would have priced an increase by the Fed into the markets.
Our customers have all been used to seeing rates below 4.0% for most of this year, but it appears that those days are gone for now.
Please feel free to contact me with any additional questions.
Colorado State Bank and Trust
There are a lot of financial steps that go into purchasing a home. Please contact me if you have any questions or would like a recommendation on a good local lender.