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Mortgage Rates Continue to Climb Predictably
April 05, 2005
The Fed continues to push up the federal fund rate. Although these push in rates are always expected, just like the last one, this time the market reacted by driving down long term bond prices, pushing mortgage rates higher. This was mostly due to the Fed's statement that there has been a real increase in inflationary pressures in recent months. In the bond market inflation equals lower prices and higher rates. In all likelihood the trend should continue to push rates higher.
This rise in rates is a warning sign in the refinance market sector. Qualified applicants are going to decrease in numbers, causing both a decrease in loans written and an increase in the dollars spent to quire the motivated home owner.
Considering that mortgage bankers are expecting a gradual refinancing decline,
it has never been more urgent than now for brokers to take advantage of all the available tools to
generate the ever shrinking pool of qualified mortgage applicants. Currently, almost half of all mortgage
applications are filled out by homeowners who
want to refinance their loans.
Estimates from the Mortgage Bankers Association are
that homeowners will refinance $1.19 trillion this year.
People still have many
reasons to refinance: to rid themselves of mortgage insurance,
switch from a fixed-rate
loan to an adjustable or vice versa, or to extract cash from a house that has gone up
in value. Those with the sharpest skills will
continue to do well in mortgage refinancing for the near
future.
