Today ended up being fairly uneventful for mortgage rates–a welcome reprieve in the context of recent volatility.  Actually, “volatility” is putting it mildly.  2021 has been a total rout for longer-term rates, even if 30yr fixed mortgages in the low-to-mid 3% range are historically excellent.  That “historical context” argument is good perspective for the casual observer, but precious little consolation to a prospective borrower that saw rates of 2.75% a few months ago and believed the hype that they’d keep going lower.

Borrowers seeking loans for investment properties and 2nd homes are finding an increasing supply of drama as recent regulatory efforts have resulted in a majority of lenders making big adjustments to the costs of those loans.  In the worst cases, it can cost you more than 7 additional points to buy an investment property as opposed to a primary residence.  That’s $21k on a $300k loan…

Today’s key news was official word from the Federal Reserve that a temporary banking rule would be allowed to expire at the end of the month.  The rule pertains to bank leverage and can affect the amount of bonds held at certain banks.  The bonds banks can own, the better it is for rates, all other things being equal.  While it’s not entirely clear how big the impact from this change will be, we can certainly chalk some of the recent rate spike up to anticipation over today’s move.  Whether that’s enough to suggest rates have found a ceiling remains to be seen.  Many people have bet against rising rates in recent weeks and quickly regretted it.  The better bet is to watch, wait, and be ready for the shift.  The higher we go, the more likely it becomes.

By Matthew Graham , dated 2021-03-19 19:04:00

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Courtesy of Mortgage News Daily

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