Mortgage Rates Winter 2019:
As we move into the last two months of 2019 it's a good idea to evaluate where mortgage rates are currently at and where they maybe during the winter months. Homeowners looking to refinance a current mortgage or homebuyers looking to purchase a new home are in a much better position to lock in a low rate compared to October, November and December 2018.
However significant risks remain and there is a chance that mortgage rates may move higher before the end of the year. Here are the biggest risks to mortgage rates heading into November 2019:
- A trade deal with China
- Brexit deal between the UK and the EU
- Improving economic conditions
Trade Deal With China and Mortgage Rates:
In the last couple of weeks we've seen movement on two of the three risks facing mortgage rates. Mid-October President Trump announced a "trade deal" with China that sent bonds (specifically Mortgage Backed Securities) into tailspin causing mortgage rates to move higher after hitting multi-year lows in September.
In the following days it became clear that the "deal" really wasn't a deal. First off there was nothing signed and second the Chinese government stated there was no formal deal and only general agreements about what a deal might look like. Despite the no deal "deal" bonds remained in sell mode and mortgage rates in California and across the country remained elevated.
Brexit Deal and Mortgage Rates:
And just last week a deal between the UK and the EU was struck however it still needs to be approved by Parliament. After the announcement that the UK government would ask the EU for another extension bonds did not improve and mortgage rates remained higher than in previous weeks.
Improving Economic Conditions:
If we see improving economic conditions in the coming weeks we may see mortgage rates move even higher. This is perhaps the biggest risk for mortgage rates heading into November and December. A stronger economy leads to higher mortgage rates and a weaker economy can lead to lower mortgage rates.
Locking In A Low Mortgage Rate:
If you are buying a home or refinancing a current mortgage it's important not to take too many risks when it comes to locking in a low rate mortgage. When it comes to mortgage rates there is a general rule of thumb you should know about:
Mortgage lenders are quick to raise mortgage rates and slow to lower them.
If mortgage rates look attractive to your current situation then you should not hesitate to lock in terms as soon as you can. For those that are buying a home; is it really worth risking the closing of loan just to save $20 - $50 per month?
If you're refinancing a mortgage avoid the temptations to try and lock in at the lowest possible level. Most people who do that end up paying more then they were hoping for or missing out all together.