Mortgage rates pushing higher

Mortgage interest rates have been moving higher at a pace not seen in years. If you’ve been a subscriber to The Mortgage Porter, you may recall that I often say mortgage rates move up much faster than they come down…the jump over the last few days has surprised many.

If you are currently preapproved for a mortgage, it is CRITICAL that you contact your mortgage professional ASAP. Preapprovals are based on a specific mortgage payment that you qualify for and unless the interest rate is locked (which doesn’t happen until after you are in contract to buy a home), the interest rate that was estimated for your preapproval is most likely no longer valid.

If you are currently in process for a mortgage loan for a purchase or refinance, you may want to confirm that your interest rate was locked. If you were “floating” and opted not to lock, you may want to contact your mortgage professional to see what they advise.

The Fed will wrap up their two-day meeting tomorrow morning where it is expected (pretty much known) they will raise the Fed Funds rate… the question is how much the will rate be increased. Although the Fed Funds rate does not directly impact mortgage interest rates (except for home equity lines of credit based on the prime rate), mortgage interest rates will react to outcome of the meeting tomorrow. This is because mortgage interest rates are based on bonds (mortgage-backed securities) and bonds react negatively to inflation. This is largely why we’re seeing mortgage rates climb so quickly.

As a side note, if you have a home equity line of credit or debt that’s attached the prime rate, such as many credit cards, expect your interest rates to continue to move higher throughout the end of the year (and beyond) as it highly anticipated the Fed will continue to increase the funds rate (which the prime rate is based on).

PS: We have fixed rate second mortgage programs if you’re wanting to refinance your home equity line of credit or other debts that are based on prime. Please click here if you would like to see a detailed rate quote for your home located anywhere in Washington state.

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