Mortgage rates jumped in the past 7 days because of rising oil prices. This is the staglationary fear I expected. Mortgage rates have increased to 6.0% (30 year fixed) today.
I expect mortgage rates to rise another .25% in the next 14 days for these reasons:
- Possible uncertainty at the Federal Reserve Bank.
- Oil above $125/barrel (which translates to $4/gal. gasoline at the pump)
- Inflation affecting the European economy.
Bond traders hate uncertainty so we expect a lot of volatility through Labor Day. As mortgage rates approach the 6.25% level, we should see them plateau unless inflation gets even worse.
I expect I’ll be changing the recommendation to float in 10-14 days but for now, lock all mortgage rates at loan application.