Mortgage markets improved last week as the Federal Reserve provided new market stimulus and the Eurozone continued to grapple with Greek’s sovereign debt issues.
Conforming mortgage rates fell in NY last week overall, dropping for the second straight week.
For rate shoppers, the best day on which to lock a mortgage rate last week proved to be Thursday.
Fresh off the Federal Reserve’s Wednesday afternoon announcement that the group will launch a $400 billion program in support of longer-term bonds, mortgage rates fell. This occurred because mortgage rates are based on the price of mortgage-backed bonds, and mortgage bonds are a beneficiary of the Fed’s new program.
Those gains were short-lived, however, because Friday morning, when the market opened, mortgage bonds were deteriorated, and that momentum carried through to the afternoon.
By the time the markets closed for the weekend, nearly all of the Fed-led gains had been drained from mortgage bonds.
Within a matter of 48 hours, the average 30-year fixed-rate mortgage rates had plunged — then surged — 0.250 percent.
The speed at which rates changed underscores how tough it can be to shop for a mortgage these days. If you were quick on Thursday, you locked your rate at its low. If you “slept on it”, though, or even took too much time to think, you not only missed the best mortgage rates in more than 50 years, you missed it by entire quarter-percent.
On a $200,000 mortgage, that’s an approximately monthly payment difference of $30 per month.
This week, mortgage rates should be similarly volatile. There is a lot of economic news set for release, and the Eurozone is rumored to have a plan to save Greece from debt default. Depending on the strength of said data, and the passage of a Greek default plan, just how mortgage rates will change is unknown.
If you’re shopping for mortgage rates, the safe path is to lock what you can. Mortgage rates may fall this week, but what if they don’t? Rates have a lot farther to rise than to fall.
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