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Tuesday, November 15, 2016

Rates Move Up...Bigly!

Mortgage rates have risen since the election, but will they continue to rise? Here are my predictions.

Mortgage rates are moving up ‘bigly.’ This is not a real word, but it in light of this election, I figured I would use it to describe mortgage volatility immediately following the election.

Right after the election, mortgage rates rose well over a quarter of a percentage point in just two to three business days. This is volatility.

The question is, why? The answer is that investors fled the bond market, which, in turn, increased interest rates and poured money into the stock market. Stocks soared, particularly bank stocks.

Why did bank stocks do so well? Part of President-elect Trump’s plan is to dismantle the Dodd-Frank bill. This bill has put many regulations on large banks. The big banks stand to benefit from repealing this bill.

So, are mortgage rates on the rise for good? This is something we have to pay particular attention to. I happen to believe that this could be a potential knee-jerk reaction. I also feel that in the short term, we may see interest rates rescind back to their pre-election rate environment.

Even a small rise in interest rates can reduce buying power.

However, let us not forget how quickly interest rates can change. For this reason, we must keep our buyers and sellers informed, let them know that rates are at an all-time low, and that now is the time to take advantage of those interest rates. Even a quarter or half-percent rise in interest rates can reduce buying power sometimes even up to $30,000. It is imperative that we keep this motivation alive.

If you have any other questions about where interest rates are heading or anything else related to the mortgage world, give me a call or send me an email. I’d be happy to help you!

**The opinion shared in this post are the opinion of Matt Weaver only and do not reflect the opinion of Finance of America Mortgage, its parent company, or affiliates.**