Rise of the Interset Rates – Part 3

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blog-author-clayjeffreys2
By the time you get to the third movie, the actors are tired and they are just throwing stuff together to make a movie (see Godfather 3, Terminator 3, and The Hangover 3 to name a few). Here’s hoping the third edition of this series finishes strong!

The Lord of the Rings - The Return of the King_Disc

Looking for a solid end to my interest rate trilogy just like the Lord of the Rings did with Return of the King.

Interest rates shot up last week. What happened?!?!

The Federal Reserve meeting went back to mentioning the end of their bond buying program. In the second post of this series, I said the Fed had previously stated it would come to an end. They weren’t much more specific than that.

Well, last week, they were specific. In short, not only does it sound as if the bond buying program will end within a year, it could end this year. Also the Fed said they would stop some of their other actions that was propping up the economy as it seems to be healthier now and needs to be weaned off outside support.

This sent stocks and bonds into a frenzy. The Dow lost over 500 points in a couple of days. Normally when stocks struggle, bonds do too. Not this time. Interest rates shot up roughly 0.500% last week as the bond market is looking to readjust itself with no more Fed support.

Remember – the purpose of the Fed’s bond buying program was to help stimulate the housing market by influencing/manipulating interest rates lower. Back when this program was announced, interest rates dropped about a half point in one day. Coming off of the news that the influencing/manipulating is coming to an end, interest rates shot up roughly a half point in a few days.

What is one to do if out looking to buy a home? You have two options depending on where you are in the process.
– if under contract, lock today with a free float down as recently posted on this blog. The rate will not increase during the locked period, and can go lower should interest rates improve after you lock the rate.
– if starting to look at homes, try our lock and shop program. You can look to do a 45 or 60 day rate lock (30 days to find a home and 21 days to complete the loan process). Once you are locked, the rate won’t get worse. Once you find a home, you can then look to use the free float down if interest rates have improved.

Want to get going on one of these options? If the property is in the state of Georgia, I can help. You can find my contact info at the bottom of this page. Get in touch with me, and we’ll get started!

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One Response to “Rise of the Interset Rates – Part 3”

  1. Rates up, down and all around | The Mortgage Blog Says:

    […] discussed in a recent post on this blog, statements by the Federal Reserve (or other government agencies) can impact interest […]

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