What a difference a week makes!

Home loan rates pushed up to 5.625% on Wednesday, a level not seen since the Federal Reserve announced its mortgage backed security purchase plan last November.

Rates have improved from Wednesday’s peak and are still phenomenal compared to historical interest rates. So much has happened in the credit markets over the last year it is hard to remember that in June of 2008, 30 year fixed mortgage rates hovered around 6.25%. That is nearly 1% higher than today!

The rise in mortgage rates continues to be attributed to fears of inflation and over-supply of bonds in the market. The improvement in rates is partially due to news that the Paulson & Co. hedge fund will begin purchasing distressed debt and mortgage backed securities. Additionally, there are no Treasury bill auctions scheduled for next week and this will give some relief to the oversupply in the market. In other news, consumer sentiment came in at its highest level in 9 months and retail sales met expectations. Since this met market expectations, it did not cause a reaction in bonds.

Where rates go from here is always open for speculation. What is certain are today’s rates. Current rates make it possible to get a historically low mortgage interest rate. It is still a great time to purchase a home or refinance your current mortgage.

~ Courtesy of Wendy Charles, LoanCentral LLC, 425.468.9321, WendyC@LoanCentral.com