Bay Area Mortgage Rates Set New Milestone- Rise For The 7th Straight Day

Bay Area Mortgage Rates Set New Milestone- Rise For The 7th Straight Day

Mortgage markets worsened for the 7th straight day Tuesday, equaling the longest losing streak of the last 5 years.

Conventional, 30-year fixed mortgage rates are now scratching 5 percent, with FHA mortgage rates running roughly the same.

This is a huge increase from just 11 weeks ago when mortgage rates were riding an 8-month-long hot streak, and appeared headed into the 3s. Then the Federal Reserve intervened.

On November 3, as additional support for markets, the Fed announced its second round of bond buys, a $600 billion program dubbed QEII — short for Quantitative Easing, Round II. Wall Street got spooked on the news; investors feared runaway inflation.

That’s when low rates ended. Here’s why:

(A) Inflation makes the U.S. dollar lose its value,

And, (B) U.S. mortgage bond payments are paid in U.S. dollars.

Therefore, (C) Inflation makes mortgage bond repayments lose their value.

When mortgage bond repayments are worth less, bond demand falls among the global investor set and that causes bond prices to fall along with it. When bond prices fall, mortgage rates rise and that’s exactly what we’re seeing right now.

What Are You Waiting For?

Since the Fed’s QEII announcement, mortgage rates have soared and home afford-ability across California is taking a hit.

Given recent trends, it’s probably safe to declare the Refi Boom “officially over” and the era of low mortgage rates may be over, too.  Home prices may move up or down in Pleasanton this year, but rising mortgage rates could render the point moot. If you’re looking for a great “deal” with low, long-term payments, the time to get in contract may be now.

Because of rising rates, homeowners have lost roughly 10% of their purchasing power since November.

I see it as you have two choices from here. You can wait for rates to fall (not likely) or move on from here and purchase a home while rates are in your favor and not near the 6% range we will be seeing soon in the Bay Area.

In hind sight todays rates will look like a bargain. Don’t look in the rear view mirror while driving. Call me today or message me below. I would be happy to help you with a pre-approval and put you in touch with some of the top Real Estate agents in the Bay Area.

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