With the benchmark U.S. Treasury rate standing at 2.23% on Nov. 16, up from 1.83% on Nov. 7 -- the day before the U.S. presidential election -- mortgage rates are climbing, and fast.
30-year fixed rate mortgage rates have risen from 3.77% to 3.95% in the same time frame, and the frenzy shows few signs of abating. This week, the Mortgage Bankers Association reports that mortgage applications fell 9.2% from a week earlier, for the week ending Nov. 11. That's the biggest decline in applications in 18 months, the MBA reports.
"Following the election, mortgage rates saw their biggest week over week increase since the taper tantrum in June 2013, and reached their highest level since January of this year," notes David Stevens, president and CEO at the MBA. "Investor expectations of faster growth and higher inflation are driving the jump up in rates, and rates have now increased for five of the past six weeks, spurring a commensurate drop in refinance activity."
With the mortgage rate environment in a high state of anxiety, should potential homebuyers and home mortgage refinancers get off the fence and grab a mortgage, before rates potentially go higher?
"Yes," say some financial gurus.
"There is no time like the present to get a mortgage loan," says Robert Johnson, president and CEO of The American College of Financial Services, and co-author of the book Invest With The Fed. "Most pundits agree that rates will rise in the future."
Johnson says there is a high probability that the Fed will raise short-term interest rates following the Fed Open Market Committee meeting. "When this happens, the expectation is that longer-term rates will rise," he reasons. "Higher rates will be sparked by expected greater fiscal spending on infrastructure as proposed by president-elect Trump. This fiscal stimulus will have an inflationary impact. Additionally, interest rates have been at historically low levels for an extended period of time. The likelihood that rates will rise is markedly higher than the likelihood that rates will fall."