Mortgage rates are rising after the Republican candidate won the U.S. presidential election.
From Wall Street to Main Street, no one saw this coming.
A correction is in progress. Investors had "priced in" a Democratic win, but now must adjust to the unexpected election results.
Mortgage rates appeared to be on the cusp of a steep drop overnight. A win by the Republican nominee was supposed to usher in a time of uncertainty.
Instead, rates rose. Why? It appears investors fear more government spending, which could hurt mortgage rates.
Now could be the right time to lock, before rates rise even more.Click to see today's rates (Apr 30th, 2017)
Mortgage rates, contrary to belief, are not controlled by the government.
Rather, they are based on an asset called mortgage-backed securities, or MBS, which are traded just like stocks on the open market.
And just like stocks, MBS values rise and fall based on speculation.
In general, uncertainty leads to lower rates.
While that might have been the case today, that didn't happen. Concerns of a radical new administration dissipated overnight. The stock market is up, and so are mortgage rates.
Instead, investors adopted a new fear: that of increased government spending. An administration focused on defense, infrastructure, and tax cuts could flood the market with government bonds to pay for these initiatives.
MBS are a type of bond. Increased supply would drive down demand. Lower demand for MBS is bad for mortgage rates.
As a mortgage consumer, mortgage rates today could be the best available for the rest of 2016.Click to see today's rates (Apr 30th, 2017)
November is proving to be one of the wildest rides for mortgage rates in an already turbulent year.
In the first days of November, investors shrugged off a Federal Reserve meeting and a stellar jobs report. Either one could have made an outsize impact on mortgage rates. But this is no typical month.
All eyes were on the U.S. election.
In late October, mortgage rates dropped on word that the FBI would renew its investigation of the Democratic nominee. Analysts lowered the chances of a win for the candidate. The stock market entered its worst losing streak in 8 years.
Just days later, though, the investigation ended. There was nothing new to report. The stock market rallied -- and mortgage rates jumped -- as the market once again baked in a Democratic win.
Remember that markets like predictability.
But, the unforeseen happened. The Republican candidate started pulling ahead. Dow futures fell up to 900 points. Mortgage rates were poised to fall, too.
Investors recovered quickly, though, erasing massive overnight swings. The stock market stabilized and mortgage rates started rising.
No one could have predicted gyrations seen this election cycle.
You may be asking: what should I do about the current state of mortgage rates?
Recent events could drive up rates past recent 5-month highs.
Locking now could be in your best interests. Rates are still low historically, but could be headed higher in coming days.
Opportunity could exist within the turmoil.
No matter where currents were before the election, refinancing homeowners should compare their current rate to today's mortgage rates.
You may be eligible for a zero-closing cost refinance in which your lender pays all your closing costs with a slightly higher-than-market rate. But the rate you get could still be much lower than your current one.
There is little reason not to refinance if you get a lower rate and avoid the fees, too
And, refinancing does not need to take a lot of time. Most FHA homeowners are eligible for an FHA streamline refinance as long as they have made at least 6 payments on their current loan. Lenders don't require income verification or even an appraisal.
That means even underwater homes qualify.
VA home loans offer a similar program. The VA streamline refinance is a VA-to-VA loan that exchanges your former mortgage with a new one with a lower rate.
VA mortgage rates are incredibly low, about one-quarter percent below conventional loan rates. Now, VA rates will be even lower.
The HARP refinance allows homeowners to refinance if they 1) have a loan owned by Fannie Mae or Freddie Mac; 2) have little or no equity, and; 3) are current on their payments.
HARP has helped over 3 million underwater homeowners refinance into a lower mortgage rate, but the program expires September 2017. HARP-eligible mortgage holders should check into the program soon to avoid missing the cutoff.
No matter which loan type you have, there could be an opportunity to lower your homeownership costs.
It's an excellent time to be shopping for a refinance.Click to see today's rates (Apr 30th, 2017)
Those in the process of buying might be wise to lock -- if you have an accepted offer on a property. Most often, lenders require a property address to lock in your mortgage rate.
Lock cautiously, though. You need your rate to last well beyond your purchase closing date.
For example, a seller accepted your offer, and the closing date is in 45 days. Don't lock for 30 days -- you'll need to request expensive lock extensions.
Instead, lock for 45 days, or better yet, sixty. Build extra time into your lock, if possible, in case the mortgage application takes longer than expected.
That's a real possibility, as rates fall and lenders get overloaded with applications.
It will cost about 125 basis points (0.125%) for each fifteen days beyond the "standard" thirty day lock. That's $125 for every $100,000 in loan amount.
A small price to pay for peace of mind.
If you have a property and closing date, now could be the perfect time to lock. Mortgage rates could head higher, hurting your buying power.
A low mortgage rate increases home affordability for as long as you own your home and keep your mortgage.
The U.S. election has put mortgage rates on edge. Now is the time to catch rates, before they rise in the days following the election.
Request your rate now. Mortgage requests come with no obligation, and no social security number is required to start.Click to see today's rates (Apr 30th, 2017)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2017 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)